This interview was originally published in Russian by Economist.kg on October 22, 2022.
Axel van Trotsenburg, World Bank Managing Director for Operations, told Economist.kg how global shocks are affecting Kyrgyz Republic's economic prospects, and what the country can do to confront the crisis and take advantage of growth opportunities.
Axel van Trotsenburg is the World Bank Managing Director of Operations. In this role, Mr. van Trotsenburg oversees the Bank’s operational program and ensures that the Bank’s delivery model continues to meet the needs of client countries. He also builds support and mobilizes financial resources across the international community for efforts to assist low and middle-income countries.
Q: Can you tell us about the trends observed in the world economy in the context of geopolitical tensions and the global economic downturn? How do these factors affect the economic situation in the world, Central Asia, and in Kyrgyz Republic?
A: As you know, we have gone through a very difficult period in the world economy starting with the COVID-19 pandemic, when there was a huge economic decline because of the lockdowns and the impact of the pandemic in general. We had hoped a lot of the economies would recover in 2021 ─ the Kyrgyz economy was recovering from a substantial downturn in 2020. And then, particularly, the war in Ukraine clouded the entire recovery.
In fact, we are seeing now the effect on the commodity markets and with the rising inflation. Our own assessments about world economic growth and the projections from other agencies have been corrected downward, also showing that quite a few countries will fall into recession.
This is a major concern: global economic recovery was necessary for employment generation and also in order to get back on track with the development agenda, as in the case of Kyrgyz Republic. How we will deal with the fallout from the war in Ukraine, particularly, in Europe in the context of the energy crisis and high inflation is on top of people’s mind.
Q: What are the prospects for economic growth for developing countries, such as the countries of Central Asia? What are the main risks? Please tell us about new opportunities for the economies of developing countries, such as Kyrgyz Republic.
A: The good news is that the Kyrgyz Republic experienced strong growth in the first half of the year. Compared to the rest of the world, the Kyrgyz Republic has been doing better.
However, it is impossible to isolate oneself from the world economy. For developing countries, it is a balancing act to be dealing with multiple crises — be it COVID-19, the volatile commodity markets, the fallout from the war in Ukraine, climate disasters — as well as keeping the long-term development agenda. And I think that this is a major challenge for countries not only in Central Asia, but also worldwide.
The World Bank is an organization that is looking at the long-term. We are very proud of the fact that we have now celebrated 30 years of partnership with the Kyrgyz Republic, and we would like to continue developing this long-term partnership. We would like to build on the longer-term agenda, which involves human capital development – education, health, social protection, and also infrastructure – looking at how to further develop the country’s considerable renewable energy resources, to help Kyrgyz Republic in realizing its growth potential and, ultimately, building a much better future for its citizens.
Q: What areas, in your opinion, should the country develop? How will the World Bank support the Kyrgyz Republic?
A: First and foremost, it is the Kyrgyz people who know best what is good for their country. We think that development of such an understanding will require an intense dialogue among the key actors in the Kyrgyz Republic – including the government, the private sector, and civil society; and the World Bank is here to support.
The Kyrgyz Republic has a lot of potential that needs to be developed. One needs to keep a sharp focus on the reform agenda that can stimulate investments in a number of sectors and significantly boost private sector participation.
On the longer-term agenda, a lot of work remains to be done in education, in health, and in better preparing young people for the future, and that entails stronger education because that will determine the success of this country. Equally, Kyrgyz Republic will need to further advance on the megatrends in the world – namely, digitalization: stepping up its efforts in this area, keeping up with other countries and ensuring that no one is left behind.
We believe that there is a lot of potential, and we can contribute on all these fronts. And I just want to reiterate our commitment to work hard with all the interested actors in the country. We have had productive meetings with the government, as well as other stakeholders. We are also very happy that we have presence here through our country office, and our Country Director for Central Asia is based in close proximity in Almaty. We are looking forward to keeping that strong relationship with the Kyrgyz Republic.
Author: Ermek Baysalov
