When the coronavirus pandemic struck in 2020, entrepreneur Amantur Asanaliev doubted whether his newly formed logistics company, TLK Supplier, would survive, let alone thrive. Sure enough, the pandemic quickly devastated many Kyrgyz businesses trading with China.
But six years on, a different black swan event – Russia’s full-scale invasion of Ukraine – has transformed Asanaliev’s industry and large parts of Kyrgyzstan’s once-teetering economy.
“The sanctions against Russia have become a new driver of the Kyrgyz economy. If we used to send three to four trucks there every month, after the war began we could send 15,” Asanaliev told The Diplomat.
In the first years of the invasion, Russia was the endpoint for most of the consignments that Asanaliev brought in from next door China.
As many countries and companies eschewed or pared down direct trade with Russia, Kyrgyzstan – a member of the Moscow-led Eurasian Economic Union – turned into a giant forwarding hub for all kinds of goods heading north.
Now, Asanaliev has mostly stopped working with the Russian market, as local orders expand rapidly to meet a multi-year construction boom.
“Domestic market demand is growing, and the state has simplified customs clearance,” said Asanaliev, using a recent consignment of component parts for a shiny new playground at a mall as an example of the kind of orders he now receives.
“Logistics in Russia can be difficult, especially in the winter. We have decided to focus on Kyrgyzstan,” the entrepreneur said.
A “Budding Asian Tiger” Under Sanctions Scrutiny
Kyrgyzstan’s GDP grew by 11 percent in 2025 and around 9 percent in 2024, with the World Bank projecting a cool down to 6.5 percent for this year.
Trade diversion isn’t the only thing driving the upswing in Kyrgyzstan, an economy that for much of the last 35 years of its independence appeared to often be one major crisis from collapse.
The country’s only notable commodity export is gold, which has benefited disproportionately from the sharpening geopolitical uncertainty. Spot prices have nearly doubled in the first year of Donald Trump’s second presidency in the United States after a bullish run in 2024.
Remittances from hundreds of thousands of Kyrgyz citizens working in Russia have also risen sharply in the years covered by the Ukraine war, with wages for migrants rising on the back of acute labor shortages there.
For President Sadyr Japarov and his allies, this is all rather vindicating. To date, his five-year administration has mostly attracted international headlines for negative reasons, including a crackdown on dissent that has brought a once-democratic country in line with its authoritarian neighborhood.
By the end of last year, though, Kyrgyzstan was being hailed by Bloomberg as Central Asia’s “budding new tiger economy.”
“Our growth rates are some of the highest in the world,” Azamat Akeneev, an economist who has advised international financial institutions working in the country, told The Diplomat in an interview in late 2025.
“Entire logistics cities are being built. Net profits for the financial sector used to be around 3 billion soms per year ($34 million at current rates). Now they are 40-50 billion soms.”
The local banking industry’s newfound strength against the backdrop of the Ukraine war has not gone unnoticed. In the last year, three mid-sized banks have found themselves targeted with sanctions over alleged cooperation with Russian entities by either the EU or the United Kingdom.
The EU’s sanctions envoy David O’Sullivan is expected to visit Kyrgyzstan at the end of this month, in what could potentially be a showdown before more targeted bans on exports come into play.
Some analysts have been calling for Brussels to get tougher on Bishkek for a while. Robin Brooks, a senior expert at the Brookings Institution, regularly posts data on exponential spikes in exports to Kyrgyzstan from EU countries, China, and South Korea on his X account. Brooks argues that the republic is often “just the name on the invoice” and that the goods never cross its borders.
The rapid expansion of warehouse space in Kyrgyzstan – modern logistics warehouses, known in the industry as Class A space, have increased at least tenfold since 2022 – suggests that this isn’t always true. And that, in turn, means that much of the new economic activity inside Kyrgyzstan is reliant both on avoiding the kind of secondary sanctions that Brooks advocates in the short term, and on continued interest in Kyrgyzstan as a trade route in a hypothetical future where Russia’s ties with the West have normalized.
“If Your Wages Haven’t Doubled…’”
For the moment, many Kyrgyz citizens are feeling pain despite the growing economy. Official inflation is once more approaching double digits after cooling off in 2024. And few believe that government statistics capture the scale of the burden on consumers.
One woman pensioner, Damira Jekshenova, 61, told The Diplomat that her monthly pension has risen from 2,900 soms in autumn 2022 ($35 at the time) to 7,500 ($86 at current rates). But that still only covers a sack of flour, a liter of cooking oil, a pack of tea, a kilogram of meat, and enough milk for the month.
“I don’t buy medicines because they’ve become so expensive. Our children buy them for us,” Jekshenova said.
Shaani, a 31-year-old schoolteacher, moved last year from Bishkek to Orlovka, a small town 100 kilometers from the capital, because the city has become unaffordable for teachers.
“We are now buying apples for 150 soms ($1.72) per kilogram in a region where apples are grown,” Shaani, who preferred to use only her first name, said. “Housing has become so expensive that half of my salary goes on rent, even here in Orlovka. I don’t understand how people in Bishkek feed their families.”
Indeed, average rent prices in Bishkek have risen over 30 percent since 2022, with a two-bedroom apartment costing around $600 per month now. The crowd-sourced cost of living platform Numbeo shows prices to buy new apartments are around 40 percent more expensive in Bishkek than in neighboring Kazakhstan’s capital, Astana, despite average monthly incomes in the oil-rich country’s capital being nearly 40 percent higher.
The IMF has warned that the Kyrgyz economy might be running hot, with productivity improvements and structural reforms failing to keep pace with rapid investment and job creation, much of which is coming – directly or indirectly – from the state. Although the government has boosted macroeconomic stability by expanding the tax base and hiking utility tariffs, for instance, that is scant consolation for people feeling the cost-of-living pinch.
Akeneev contends that far from getting richer, Kyrgyzstan’s middle class might even be shrinking somewhat in the economic boom. “If your wages haven’t doubled, then you have probably become poorer,” the economist said.