CB reports a one-third decrease in remittance volume since the start of the year
Fiscal Stimulus Boosts Consumer Demand and Economy, Central Bank Reports
In recent months, the Central Bank has observed an acceleration in price growth due to inflationary factors and shifts in commodity supply, according to a press release. As a result, the regulator has decided to maintain the key interest rate at 14% per annum in order to control inflation, which is forecasted to be around 9-9.5%.
After initially declining earlier in the year, overall inflation has risen to 9.2% by the end of September. This increase is largely attributed to the seasonal rise in food prices as well as higher regulated prices. Core inflation, which excludes volatile components, continues to slow but remains significantly higher than overall inflation at 10.3%. To address this, the Central Bank recommends continuing a “relatively tight” monetary policy.
While inflation and exchange rate dynamics of partner countries have put pressure on the effective exchange rate of the local currency (soum), there are positive trends in the real sector of the economy. Fiscal stimulus measures have boosted consumer spending and aggregate demand, resulting in a 28% increase in revenue from trade and services.
Furthermore, non-centralized investments have significantly increased since the beginning of the year, contributing to a GDP growth of 5.8% over a nine-month period. However, the inflow of cross-border remittances has decreased by 33.7% compared to last year, primarily due to the high base effect. On the other hand, it has grown by more than 40% compared to the same period in 2021.
To maintain overall moderate lending growth rates, the Central Bank has implemented macroprudential measures to counterbalance the rapid increase in the retail loan segment.
Overall, the current fiscal stimulus measures have had a positive impact on the economy, boosting consumer demand and contributing to GDP growth. However, the Central Bank remains focused on managing inflation and ensuring stability in the financial sector through its monetary policy.
