ECONOMY

Lyudmila BAUM

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Lyudmila Baum, Leading expert, International Institute for Strategic Studies under the President of the Kyrgyz Republic (Bishkek, Kyrgyzstan)

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After the events of March 2005, the country had to live and work in extremely unstable conditions. Since the economy is very sensitive to drastic changes and immediately responds by a decline in growth rates and worsening budget indicators, in 2006 it developed against the background of negative processes.

1. The existing socioeconomic differences between the regions deepened. Regional development policy was virtually absent.

2. Negative processes in production and the social sphere assumed a long-term, persistent character.

3. There was further pauperization of the population, loss of skills, and degradation of the human potential.

4. Migration processes intensified, leading to a reduction in the share of the economically active population in the republic.

General Macroeconomic Situation

Whereas in 2005 there was an obvious decline in the country’s economic performance, 2006 brought the first signs of a recovery. Some economic indicators improved, but certain major indexes (industrial production, consumer prices) continued to worsen.

The gross domestic product at year-end increased by 2.7% compared to the same period of 2005 (the government Program of Concrete Actions had projected an increase of 8%). Considering that………….

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