Investor’s guide to Central Asia

This guide is essential for anyone establishing operations in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan or Uzbekistan.

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Central Asia’s strategic location and abundance of valuable natural resources make it an attractive destination for investors. The region’s economy went from strengthen to strength in the early 2000s in line with soaring commodity costs. It then suffered a steep decline between 2014 and 2016, consistent with the global oil price plunge. GDP kept growing steadily from 2017. Here we look at the all the data of interest to would-be investors in Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan.

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Kazakhstan is the largest Central Asian economy by far in both absolute and per capita terms. The country, which has a land area equivalent to that of western Europe, represented approximately 60% of the region’s GDP in 2024.

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Categorised by the World Bank as an upper-middle-income economy, Kazakhstan has utilised its geographic location, wealth of natural resources and strong domestic demand to stimulate economic growth.

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Following the dissolution of the Soviet Union in 1991, Kazakhstan experienced a sharp economic decline as demand waned for its traditional heavy machinery products. The signing of the Caspian Pipeline Consortium Agreement in December 1996 significantly expanded the country’s international standing. Eight major oil and gas companies, including Statoil, Total and BP, took shares in the project, which saw the construction of a new pipeline from the Tengiz oil field to the Black Sea.

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Kazakhstan’s economy grew sharply in the early 2000s, largely due to the commodities boom. The country’s leading exports – including oil, metals and grain – soared in price as a result of increased demand from emerging markets. Kazakhstan also benefitted from business with its bordering countries Russia and China.

However, Kazakhstan’s dependency on the primary industry leaves it vulnerable to oil price fluctuations. The country experienced a slowdown in economic growth between 2014 and 2016 due to plummeting oil prices and the Ukrainian crisis.

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In June 2021, President Kassym-Jomart Tokayev announced plans for greater economic diversification and greener solutions at a meeting of the Foreign Investors’ Council. Even so, oil remains a key economic sector with hydrocarbons representing 21% of Kazakhstan's GDP and roughly 70% of exports in 2020.

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Uzbekistan is the second-largest economy in Central Asia, accounting for one-fifth of the region’s overall GDP in 2024. It was also the rapid economic and populated grwoth Central Asian country since 2017.

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Uzbekistan’s economy is heavily reliant on agriculture. The sector represents 28% of the country’s GDP and employs 27% of the population. It is the world’s fifth-largest exporter and seventh-largest producer of cotton.

After becoming an independent state in September 1991, Uzbekistan largely maintained its Soviet-style command economy with a focus on state intervention and the implementation of an import substitution policy. From 2016, the government has taken small steps to move towards a market economy.

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In October 2019, the government introduced the Agriculture Development Strategy of Uzbekistan for 2020–2030. The plan aims to transition to a market-based agriculture system, increase competitiveness and expand job opportunities..

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Turkmenistan, one of the most sparsely populated countries in Asia, possesses the world's fourth-largest reserves of natural gas. Its economy is heavily dependent on the natural gas, oil and petrochemicals sectors as well as cotton, textiles and wheat.

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The economy has been in crisis since late 2014 following a collapse in global energy prices. Turkmenistan has been slow to recover from the deep recession due to its over-reliance on natural gas exports and its disagreements with potential trade partners. In 2019, Russian gas company Gazprom agreed to renew its purchases of Turkmen gas after a three-year hiatus following a dispute on pricing.

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Since 2007, the economy is dominated by state-owned monopolies that control the development of new onshore hydrocarbon fields. Currently, China is the country’s largest export market.

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Tajikistan has the fastest-growing population of all countries in Central Asia at 2.3% in 2020. Agriculture is the largest economic sector in Tajikistan, contributing approximately 23% to the country’s GDP and 46% of the workforce.

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In addition, Tajikistan benefits from abundant freshwater resources and, as a result, hydropower for export in the region. The government is playing a major role in the development of the 1,200km CASA-1000 transmission line. Once finished, the $1.2bn project will connect Kyrgyzstan and Tajikistan to Afghanistan and Pakistan during the peak summer season to sell clean, low-cost hydropower.

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Kyrgyzstan was the smallest economy in Central Asia in 2020 with a GDP of $7.7bn, down from $8.9bn in 2019.

The country is rich in mineral resources including coal, gold and uranium. Kyrgyzstan also has plentiful water resources allowing it to produce and export hydroelectric energy.

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Following its succession from the Soviet Union in August 1991, Kyrgyzstan implemented various market reforms to improve its regulatory system. In 1998, it was the first Commonwealth of Independent States (CIS) country to be accepted into the World Trade Organisation.

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Where in Central Asia is best for doing business?

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Kazakhstan has long positioned itself as one of the most business friendly and least volatile countries in Central Asia. It has the highest internet access rate of all countries analysed and scores the best on Transparency International’s Corruption Perception Index. In addition, it takes just five days on average to start a business, a substantial reduction from 32 days in 2003.

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It takes just three days to set up a business in Uzbekistan, the shortest time across the region. The country also has the lowest corporation tax rate at 7.5%.

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The Uzbek government introduced more reforms to boost economic growth and improve its investment landscape in 2020. The Uzbekistan Anti-Corruption Agency was established to fight against corruption within governmental bodies and legal entities. In addition, President Mirziyoyev signed a decree banning state-owned enterprises (SOEs) from operating companies within the commodities market, where SOEs might compete with private companies or have conflicts of interest.

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