Kyrgyz Republic could see GDP plunge 10 percent as a result of COVID-19, as domestic violence surges

August 18, 2020


Bishkek — The COVID-19 pandemic and measures to contain it have caused joblessness and domestic violence to spike in the Kyrgyz Republic, with GDP expected to sink by 10 percent in 2020, according to a new study by UNDP, the Asian Development Bank (ADB), and the Kyrgyz Economic Policy Research Institute.

Vital remittance inflows to the landlocked Central Asian country could plunge by 25 percent, while unemployment could surge to 21 percent, the report, COVID-19 in the Kyrgyz Republic: Socio-Economic and Vulnerability Impact Assessment and Policy Response, finds.

Women, children, and vulnerable people such as those working without social protection in the informal economy have been hit hardest. And from January–March, the number of reported domestic violence cases rose by an alarming 65 percent compared with the same period a year earlier.

Private spending on nonfood items and services has also plummeted, with a 15 percent drop in the volume of retail trade during the first half of 2020 and a 5.3 percent decline in GDP from January to June. Receipts from tourism and travel services are expected to drop 90 percent.

“The Kyrgyz Republic is facing an urgent and difficult set of challenges,” UNDP Resident Representative in the Kyrgyz Republic Louise Chamberlain said, citing massive losses across major economic sectors—tourism, trade, consumer services, and construction. “Many of its revenue sources are either temporarily suspended or are at risk of collapsing entirely.” This will create a substantial external financing gap requiring support from the International Monetary Fund, ADB, and other partners.

Recommendations in the report, which will inform policy and programming, include:

- Boosting investment to ensure that critical health services, especially for vulnerable communities, continue functioning—alongside the battle against COVID-19.

- Expanding support for micro, small, and medium-sized enterprises to help stabilize and prepare businesses for recovery.

- Providing aid to labor migrants stranded in destination countries, along with social services in areas where returning migrants are concentrated.

- Augmenting support to informal workers, extending benefits for six months and covering 500,000 new recipients.

- Scaling up job creation and labor market support to expand job opportunities, including cash-for-work schemes and related services.

- Promoting digitalization to minimize the socio-economic impact of COVID-related lockdowns, and to improve access to finance, e-governance, and e-health, reduce or eliminate the digital gender and urban-rural divide, and strengthen remote learning capacity in the education system.

- Working to build back better and more sustainably, incorporating water-efficient agriculture, modernized solid waste management, green and inclusive city planning, and sustainable ecotourism into recovery efforts.

UNDP, ADB response to the crisis

UNDP’s COVID-19 crisis response focuses on rule of law and e-governance, investments in digitalization and the green economy, strategies for informal sector workers, and design of a new generation of resilient, green jobs that support youth-led entrepreneurship. As part of the UN system response to COVID-19, UNDP has mobilized US$2.8 million for early support to the health sector in Kyrgyz Republic and realigned operations to support resilient recovery following the pandemic.

ADB provided US$50 million in budget support to help the Kyrgyz Republic mitigate the health and socio-economic impacts of COVID-19 in May, followed by US$20 million in emergency assistance to help strengthen the health sector in June. In April, ADB approved US$200,000 followed by an additional US$800,000 for emergency medical assistance to help the Kyrgyz Republic procure medical supplies and equipment.

The first COVID-19 cases were detected in the Kyrgyz Republic in March, after which the government introduced strict lockdowns and closed borders to contain the virus.

The capital, Bishkek, and southern city of Osh have been hit hardest by the pandemic, along with the eastern lake area of Issyk-Kul, industrial and trading center Karasuu bordering with Uzbekistan, and the northern garment-manufacturing hub of Chui. Batken, Jalal-Abad, and Osh, all in the south, are expected to suffer most as a result of falling remittances and returning migrants.