The Kazakh economy is past the worst, with a rebound in oil pricesoffering support for the tenge, mitigating inflationary pressures, andallowing for monetary policy easing in the coming months. Strongsovereign position will prevent a collapse of the banking system.
Continued investment in the infrastructure sector will provide domesticsupport for Kyrgyzstan's economy while we expect remittanceinflows into the country to rise steadily on the back of an improvingRussian economic outlook. However, the upcoming presidentialelection continues to present downside risks amid ongoing politicaluncertainty. We therefore maintain our 2017 real GDP forecast forgrowth to pick up to 2.3% (from 1.0% in 2016).
Economic conditions in Tajikistan will deteriorate in 2017 as thecountry will be undermined by a weak banking system, tighter monetarypolicy, and a significant reliance on remittances from Russia.
We expect Turkmenistan to continue to face growth headwinds asit struggles to cope with the fallout from the stalling of the D line gaspipeline as well as domestic structural issues. However, continuedconstruction will provide a degree of support. We therefore maintainour real GDP growth forecast for 2017 to come in at 5.1%, markinga considerable slowdown from the 11.0% averaged from 2010-14.
Following a better than expected performance of 7.8% in 2016, weare upgrading our forecast for Uzbekistan's real GDP growth tocome in at 8.0% and 8.1% in 2017 and 2018, respectively. Factorssupporting our positive outlook include an increase in investmentactivity led by infrastructure projects, an improving external sector,and signs of market-oriented economic reforms.