Unemployment surges in Kyrgyzstan as impact of Covid-19 hits economy

The Covid-19 pandemic and measures to contain it have caused joblessness and domestic violence to spike in the Kyrgyz Republic, with GDP expected to sink by 10 per cent in 2020, according to a new study by the United Nations Development Programme (UNDP), the Asian Development Bank (ADB), and the Kyrgyz Economic Policy Research Institute.

Vital remittance inflows to the country could plunge by 25 per cent, while unemployment could surge to 21 per cent, the report, Covid-19 in the Kyrgyz Republic: Socio-Economic and Vulnerability Impact Assessment and Policy Response, finds.

Women, children, and vulnerable people such as those working without social protection in the informal economy have been hit hardest. And from January–March, the number of reported domestic violence cases rose by an alarming 65 per cent compared with the same period a year earlier.

Private spending on nonfood items and services has also plummeted, with a 15 per cent drop in the volume of retail trade during the first half of 2020 and a 5.3 per cent decline in GDP from January to June. Receipts from tourism and travel services are expected to drop 90 per cent.

“The Kyrgyz Republic is facing an urgent and difficult set of challenges,” UNDP Resident Representative in the Kyrgyz Republic Louise Chamberlain said, citing massive losses across major economic sectors—tourism, trade, consumer services, and construction. “Many of its revenue sources are either temporarily suspended or are at risk of collapsing entirely.” This will create a substantial external financing gap requiring support from the International Monetary Fund, ADB, and other partners.

Recommendations in the report include boosting investment to ensure that critical health services, especially for vulnerable communities, continue functioning—alongside the battle against Covid-19; expanding support for micro, small, and medium-sized enterprises to help stabilise and prepare businesses for recovery; and providing aid to labour migrants stranded in destination countries, along with social services in areas where returning migrants are concentrated.

Further recommendations include augmenting support to informal workers, extending benefits for six months and covering 500,000 new recipients; scaling up job creation and labor market support to expand job opportunities, including cash-for-work schemes and related services; promoting digitalisation to to improve access to finance, e-governance, and e-health and strengthen remote learning capacity in the education system; and working to build back better and more sustainably, incorporating water-efficient agriculture, modernised solid waste management, green and inclusive city planning, and sustainable ecotourism into recovery efforts.

As part of the UN system response to Covid-19, the UNDP has mobilised 2.8 million US dollars for early support to the health sector in the Kyrgyz Republic and realigned operations to support resilient recovery following the pandemic. The ADB provided 50 million US dollars in budget support to help the country mitigate the health and socio-economic impacts of Covid-19 in May, followed by 20 million US dollars in emergency assistance to help strengthen the health sector in June. In April, ADB approved 200,000 US dollars followed by an additional 800,000 US dollars for emergency medical assistance to help the Kyrgyz Republic procure medical supplies and equipment.

The first Covid-19 cases were detected in the Kyrgyz Republic in March, after which the government introduced strict lockdowns and closed borders to contain the virus. The country has so far reported just under 45,000 cases of Covid-19, and more than 1,000 people have died with the virus.

The capital, Bishkek, and southern city of Osh have been hit hardest by the pandemic, along with the eastern lake area of Issyk-Kul, industrial and trading centre Karasuu bordering with Uzbekistan, and the northern garment-manufacturing hub of Chui. Batken, Jalal-Abad, and Osh, all in the south, are expected to suffer most as a result of falling remittances and returning migrants.

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