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WEEKLY NEWSLETTER
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Kyrgyzstan
Index
Industrial production in Kyrgyzstan declined significantly in 1992 and
1993, especially in comparison to the average annual growth rate from 1985
to 1990, which was 3.3 percent. Important factors in this decline were the
energy crisis caused by the loss of Soviet-era fuel supply agreements and
the outflow of skilled Russian industrial and management personnel. By
1994, when output had fallen by another 25 percent, Kyrgyzstan's
production was only 42 percent of its 1990 level. Only four of the
country's 200 most important industrial products--oil, electrical power,
household electric appliances, and alcoholic beverages--showed an
increased output in 1994. By the first quarter of 1995, some 120
enterprises, more than one-third of the national total, were idle. The
decline was caused by problems in obtaining raw materials, components, and
other inputs; a drop in effective demand; the economic weakness of trading
partners; and problems in arranging for payments. An important additional
problem, however, is the nature of Kyrgyzstan's Soviet-era industrial
structure, which was specialized for defense-related manufacturing. Many
defense-related industries closed in the early 1990s because they could
not find alternative types of production once Soviet defense contracts
ended. The government's initial policy was to avoid supporting
unprofitable state enterprises, but intense political pressure has kept
many such firms open.
Including mining, the electric power industries, and construction,
industry contributed about 45 percent of GDP in 1991, but that percentage
dropped significantly in the following years, even with a parallel
agricultural decline. For example, between 1991 and 1993 production of
crude steel decreased 45 percent, cement production decreased by 49
percent, and production of metal cutting machines dropped by 77 percent.
Gross capital formation decreased an estimated 55 percent in 1994, and
investment for that year was below 25 percent of the rate at the end of
the Soviet period. Private investment, however, rose slightly to nearly
half of total investment for 1994.
None of the major industrial projects planned for 1993-94 was completed
on time. Included in major construction postponements was a cigarette
factory in Osh, which could have taken advantage of southern Kyrgyzstan's
favorable tobacco-growing conditions. Many other projects were completed
on a much smaller scale than originally planned. As conversion to useful
new lines of manufacture was delayed, the national economy shrank. In
addition, unemployment grew rapidly as state-owned enterprises were phased
out but not replaced.
In the mid-1990s, the most valuable industrial components of
Kyrgyzstan's economy were machine building, textiles, and food processing,
which are centered in Bishkek, Osh, and Jalal-Abad (see fig. 5; table 14,
Appendix). Some electronics and instruments are produced in former defense
plants, and a limited metallurgical industry also exists. The most
productive"industry" is electric power, which is produced in the
country's numerous hydroelectric plants.
Data as of March 1996
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