Rebalancing Kyrgyzstan's Economy: More Industry, Less Agriculture

(MENAFN- Trend News Agency) ** BAKU, Azerbaijan, February 26.** The beginning of 2026 has been marked by significant structural transformations within Kyrgyzstan’s economy. In January, the nation’s GDP reached 125.7 billion soms ($1.44 billion), reflecting a 9% increase compared to the same month in 2025. This growth was propelled by a confluence of factors, including the expansion of goods production, the services sector, and net taxes on products, underscoring both robust domestic economic activity and enhanced fiscal revenues.

Services continue to dominate the economic structure, accounting for 52.3% of GDP. However, this represents a decrease of 2 percentage points relative to the previous year, signaling a deceleration in the sector’s growth. In contrast, the share of goods production has risen to 30.7%, illustrating a shift in the economy’s focus towards manufacturing and construction. Within this context, the industrial sector increased its contribution to GDP by 4.3 percentage points, while construction saw a modest rise of 0.3 percentage points. Conversely, agriculture experienced a slight decline of 0.4 percentage points, reinforcing the ongoing trend of its diminishing relative importance within the broader economy.

A closer look at goods production shows that the industrial sector recorded growth of 12.5%, with mining expanding by 37.7% and manufacturing by 12%. These figures indicate the strengthening of the country’s industrial base and growing export potential, particularly in the raw materials segment. At the same time, construction grew by 25.7%, pointing to increased public and private investment flows into infrastructure and residential real estate. Agriculture, forestry, and fishing posted moderate growth of 3.5%, suggesting stability but limited potential for a rapid increase in its share of GDP.

Despite a decline in its relative share, the services sector remains the dominant component of GDP, accounting for more than half of the total, and recorded a growth rate of 8.9%. However, its slower growth relative to goods production signals a redistribution of resources within the economy, with a pronounced shift towards the productive sectors of industry and construction. This shift reflects a structural transformation characteristic of developing economies, where the expansion of industrial production fosters new avenues for value creation and enhances export potential.

An analysis of prevailing trends reveals several critical risks and opportunities for Kyrgyzstan’s economic trajectory. The expansion of the mining and manufacturing sectors presents opportunities for increased export revenues; however, it simultaneously heightens the economy’s exposure to fluctuations in global commodity prices. Growth in construction and industry bolsters domestic investment and generates employment, but this progress hinges on securing stable financing and ensuring adequate infrastructure support. While the services sector remains the dominant force in the economy, its growth may become a limiting factor if it fails to counterbalance the expanding share of goods production. Despite modest growth, agriculture continues to lose its relative share, which could have implications for food security and the resilience of regional markets.

Looking ahead, several development scenarios are conceivable. Should current trends persist, GDP may continue to exhibit moderate growth, accompanied by a gradual shift in the economic structure towards industry and construction. If the industrial sector accelerates its development, the economy may enhance its export capacity and increase fiscal revenues. However, a slowdown in services growth or adverse external factors, such as volatility in energy and commodity prices, could impede GDP growth. Moreover, the continued decline of agriculture’s share may undermine domestic resilience and social stability. In this context, Kyrgyzstan is undergoing a period of structural transformation, where the equilibrium between industry, construction, and services will be pivotal in shaping both short-term growth and long-term economic sustainability.

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