At the same time, the bank left unchanged its forecast for Kyrgyzstan’s GDP growth in 2027 at 7 percent.

«The dominant short-term risk is the EU’s 20th sanctions package adopted in late April 2026, which restricts exports of dual-use goods to the country and tightens controls over the financial and logistics sectors, putting pressure on economic activity,» the report states.

According to the EBRD, higher energy prices and a potential slowdown of economic growth in Russia also pose additional downside risks.

The financial institution noted that Kyrgyzstan’s real GDP grew by 10.1 percent year-on-year in the first quarter of 2026, driven by expansion in industry, construction, and trade.

Investment in fixed capital increased by 25.5 percent, reflecting significant spending on infrastructure, energy projects, and housing construction. Private consumption remained resilient, supported by rapid household lending growth and rising real wages, which increased by 5.6 percent year-on-year during the first two months of the year.

«Remittance inflows declined by 3.7 percent year-on-year in January—February, likely reflecting tighter migration rules in Russia. Inflation accelerated to 11 percent in March 2026, mainly due to rising food prices,» the report says.

The EBRD added that the global energy price shock has already led to a significant increase in import prices for diesel fuel and AI 92 gasoline, indicating the possibility of further inflationary pressure.

In April, the European Union applied its anti-circumvention mechanism against a third country for the first time, banning exports to Kyrgyzstan of certain machine tools, including computer numerical control (CNC) equipment, as well as telecommunications equipment.