Countries in Central Asia risk facing slower GDP growth due to new US tariffs and rising global trade tensions, according to Thanos Arvanitis, Deputy Director of the IMF’s Middle East and Central Asia Department. He made the statement during an economic forum in Tashkent.
What has changed
Tariffs paused, but baseline increase applies
In early April, the United States announced higher tariffs on imports. These included rates between 20% and 40% for countries such as Kazakhstan. However, on April 9, Washington paused these higher tariffs for most countries in the region. A baseline tariff of 10% remains in force, though countries that imposed retaliatory tariffs still face elevated rates.
Oil exports exempt, non-oil exposure limited
For Central Asian countries, non-oil exports to the United States remain modest. According to the IMF, these account for less than 0.5% of GDP across the region. Oil exports are exempt from tariffs, significantly limiting the direct impact on trade.
Moderate but important risks remain
Central Asia’s economies remain sensitive to global demand. For the 10 most exposed countries, a 1% decline in trading partners’ growth could reduce GDP by between 1% and 1.8%. Exporters of oil face higher risks if global demand weakens further and oil prices remain low.
Additionally, renewed inflationary pressures may result in elevated global interest rates for a longer period. This would widen sovereign spreads and increase borrowing costs, particularly affecting MENA and CCA countries with high debt levels.
The IMF stressed that while the direct effect of US tariffs may be limited for now, the combination of trade and financial pressures makes Central Asia’s economic outlook more uncertain.
