AFCA Working Paper
Connectivity of Central Asia in the Belt and Road Initiative
Central Asia is a landlocked region located between the Caspian Sea and the Altai Mountains, and it includes five countries: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. Today, it is an important region for the Belt and Road Initiative (BRI), with several land corridors passing through Central Asia to connect the markets of East Asia, Europe, Middle East, and South Asia. The countries of Central Asia have tight and strong cultural and historical connections. This article reviews the economies of the Central Asian countries, their economic, trade, and transport connectivity with each other, and their connections to the rest of the world.
I. Overview of the Central Asian Economies
Central Asia has a total population of almost 78 million people. It could be ranked as the 20th largest in the world, just behind Türkiye, Iran, and Germany. It exceeds the populations of countries such as Thailand, France, the United Kingdom, and South Africa. Central Asia’s population has been growing dynamically at an annual rate of 1.8% over the last 10 years and is projected to exceed 85 million people by 2028 according to the IMF’s forecasts. It is also worth noting that a significant portion of the population is composed of youth, indicating great potential for the region in terms of workforce and consumer demand.
Figure 1. Central Asia overall GDP size (in $US billion)
Source: estimates (2013-2022) and forecasts (2023-2028) by the IMF
Figure 2. Central Asia overall GDP size (in $US billion) based on PPP
Source: estimates (2013-2022) and forecasts (2023-2028) by the IMF
The total nominal GDP of the Central Asian countries is estimated at $405 billion in 2022, which is comparable to the GDP of Malaysia, Vietnam, or South Africa. The GDP of Central Asia based on purchasing power parity (PPP) is estimated at $1151 billion in 2022. However, there is a significant disproportion between countries: Kazakhstan accounts for more than half of Central Asian GDP, while Kyrgyzstan and Tajikistan each have a share of less than 5%. This disproportion is also reflected in per capita data, where the average GDP per capita (PPP) in Central Asia is about $14.8 thousand. In comparison, Kazakhstan's GDP per capita is twice as much, and Tajikistan's is three times less.
According to 'The Path to 2075' by Goldman Sachs, Kazakhstan's GDP may reach $0.9 trillion by 2050 and $2.1 trillion by 2075. While the report does not include projections for other countries in Central Asia, assuming that corresponding shares of the countries would be preserved, the GDP of Central Asia could potentially reach $1.8 trillion by 2050 and $4.4 trillion by 2075.
Central Asian countries hold significant economic potential characterised by abundant natural resources, strategic geographical positioning, and opportunities for trade and investment. Rich in energy resources, minerals, and fertile land, the region presents opportunities for energy export, mining, and agricultural production. Its location at the crossroads of Asia, Europe, and the Middle East positions the region as a critical transit hub, fostering trade and connectivity.
Table 1 Overview of the Economies in Central Asia
Kazakhstan is the largest country of Central Asia by territory and economy size. Part of the country’s territory (4%) counted as part of the European continent. Kazakhstan, along with Turkmenistan, has access to the Caspian Sea. The country has more than 160 oil deposits with over 30 billion barrels of proved reserves and is a leading producer of many mineral commodities, including ferrochrome, titanium sponge, copper, zinc, and other non-ferrous metals. Kazakhstan is the largest producer of uranium globally with the second largest uranium reserves in the world. Also, the country is one of the world's major wheat grain exporters.
Figure 3. Kazakhstan’s GDP size (left axis in $US billion) and growth (right axis in %)
Source: estimates (2013-2022) and forecasts (2023-2028) by the IMF
Kyrgyzstan has substantial deposits of coal, gold, uranium, antimony, and other valuable metals. The country is also well-positioned in terms of trade, transportation, and agriculture. More than 75% of the country’s territory is covered by mountains.
Figure 4. Kyrgyzstan’s GDP size (left axis in $US billion) and growth (right axis in %)
Source: estimates (2013-2022) and forecasts (2023-2028) by the IMF
Tajikistan possesses deposits of non-ferrous and precious metals. Its exports are primarily focused on gold and aluminium, along with raw cotton and other agricultural products. Since 93% of its territory is covered by mountains, logistics becomes even more important.
Figure 5. Tajikistan’s GDP size (left axis in $US billion) and growth (right axis in %)
Source: estimates (2013-2022) and forecasts (2023-2028) by the IMF
Turkmenistan is one of the two Central Asian countries that has access to the Caspian Sea. Turkmenistan has one of the largest reserves of natural gas in the world. The country’s exports of gas contribute to regional and global energy security.
Figure 6. Turkmenistan’s GDP size (left axis in $US billion) and growth (right axis in %)
Source: estimates (2013-2022) and forecasts (2023-2028) by the IMF
Uzbekistan has the biggest population in Central Asia that is almost half of total population in the region. The country is almost unique since it is double-landlocked, in other words, all countries that Uzbekistan has a common border with are landlocked, but it is the only country in Central Asia to border with all other Central Asian countries. Uzbekistan is a major producer and exporter of cotton. The country is also an important producer of gold and has substantial deposits of silver, gas, and oil.
Figure 7. Uzbekistan’s GDP size (left axis in $US billion) and growth (right axis in %)
Source: estimates (2013-2022) and forecasts (2023-2028) by the IMF
II. Transport Infrastructure of Central asia
The internal railway systems in Central Asia are relatively developed and based on a standard gauge of 1520 mm. Majority of those railway systems consist of single-track lines, with double-track railways found in Kazakhstan and Uzbekistan only. Uzbekistan has high-speed trains (such as Afrosiyob) that connect Tashkent to Bukhara and Karshi via Samarkand.
Figure 8. Central Asia Railway Map
Source: http://legi.com.ge/transport.htm
The largest economies in the region, Kazakhstan and Uzbekistan, have only two cross-border railway connections. For Kyrgyzstan and Tajikistan, auto transport is the primary mode of transportation and, in many cases, the only viable option for traversing their territories. Therefore, the necessity of multimodality in the transportation system of Central Asia is undeniable.
This year marks the 10th anniversary of the BRI. Central Asia’s proactive participation in the initiative demonstrates how the BRI leads to win-win cooperation. On one side, China gains sustainable and fast transit access to other parts of the Eurasian continent. On the other side, a set of infrastructure connectivity projects helps the landlocked region link with the rest of the world, featuring a high degree of economic complementarity for Central Asia.
According to China Global Investment Tracker, cumulative BRI investments to Central Asia since 2014 stands at $35.3 billion, with $5.8 billion allocated for vital transport infrastructure projects. It is worth noting that investments are flowing in the opposite direction as well. For example, the establishment of the China-Kazakhstan logistics cooperation base in Lianyungang, Jiangsu province, has become an important platform for products from Central Asian countries to reach seaports.
2.1. Trade routes and trends
1. The Northwest direction leads to Russia, Belarus, and further into Europe, with possible routes to the Black Sea, Baltic Sea, or direct access to the EU via land routes. The physical volume of exports in this direction is expected to decrease until at least 2025, followed by stabilisation. Imports are expected to remain stable, both in terms of total volume and cargo type.
2. The Southern route, passing through Iran and partially Afghanistan to reach the Middle East, is expected to see increased shipments, primarily driven by metal exports. Wheat and other non-metallurgical products are also forecasted to grow due to growing population in those markets.
3. In the Eastern direction, most commodity groups are expected to experience shipment volume growth ranging from 10% to 40%. The highest growth is anticipated for ferrous metal ores and non-ferrous metal ores. Transportation of other commodities will remain stable in absolute volumes until 2035.
4. The Caspian (Western) direction may experience significant increases in export shipments, particularly for petroleum products and ferrous metal ores. While historically, transportation through the Caspian Sea made up a small portion of total imports, it is becoming a preferable option compared to other routes, especially for diversification purposes.
2.2. Transit through Central Asia
Transit times for these corridors are reported to be around 14-20 days for non-EU destinations but, in some cases, can take 60 days or more. Despite Central Asia's strategic location as a land bridge between continents, frequent disruptions, delays (often related to crossing the Caspian Sea and Black Sea), and multiple international border-crossing points with unaligned transit procedures may hinder the transit through the region.
Overland transit routes through Central Asia can be classified into three main corridors, which are also part of the New Eurasian Land Bridge and the China-Central Asia-West Asia corridor under the BRI:
1. The Northern Corridor: This corridor connects Asia and Europe, starting from China and passing through Kazakhstan and the Eurasian Economic Union before entering the European Union. It spans approximately 10 000 km and the transit time is reported to be 14 days, on average.
2. The Middle Corridor (Trans-Caspian International Transport Route): This corridor links Asia and Europe through Kazakhstan and the Caspian Sea. Goods enter the Caucasus via the port of Baku, Azerbaijan, and proceed to Georgia. From there, two alternative routes are available for entry into the EU through Bulgaria or Romania: a land-based route via Türkiye or a maritime route via the Black Sea. While shorter than the Northern Corridor, at 7 000 km, it currently involves a longer timeline, which may vary from 14 to 23 days. According to Kazakhstan Railways, in 2022, traffic along the Middle Corridor increased 2.5-fold year-over-year, reaching 1.5 million tons. In the first half of 2023, traffic reached 1.3 million tons, a 77% year-over-year increase.
3. The Southern Corridor: This land-based corridor passes through Kazakhstan, Kyrgyzstan or Tajikistan to Uzbekistan, Turkmenistan, and onwards to Iran and Türkiye before entering Europe through Bulgaria or Greece. It is a preferred route for automobile carriers as it avoids the Caspian Sea.
In the baseline scenario, it is assumed that infrastructure along the Middle Corridor and Southern Corridor will gradually develop, including the expansion of port facilities on the Caspian Sea, an increase in the necessary fleet, and the removal of bottlenecks in railway infrastructure.
Source: https://www.merics.org/en/tracker/mapping-belt-and-road-initiative-where-we-stand
Currently, Khorgos and Dostyk in Kazakhstan are the only entry points for railway transit cargo, making these two locations crucial for the continental in-land transportation. Kazakhstan plans to create a new railway cross-border point between Kazakhstan and China in Bakhty by the end of 2025.
Railway from Kashgar (China) through Kyrgyzstan to Uzbekistan could potentially become an additional entry point for transit cargo. The proposed detailed route was agreed by the three countries in September 2022.
III. Transport Connectivity through the Development of International Corridors
Given the limited domestic railway connectivity of the Central Asian countries, a multi-modal approach should be a starting point. This would allow the effective utilisation of both railways and auto transportation. However, investments require regional coordination and cooperation, not only to improve the network, but also to introduce harmonised connectivity measures.
Most of the proposed projects are related to the development of inland transport corridors. Apart from infrastructure improvements or construction, these projects will require addressing operational, commercial, and organisational challenges.
3.1. The Middle Corridor (Trans-Caspian International Transport Route)
Since this route passes through the Caspian Sea, it relies on multimodal transportation. Caspian ports such as Aktau and Kuryk ports in Kazakhstan, Turkmenbashi port in Turkmenistan, and Baku and Alat ports in Azerbaijan, are equipped to handle railway ferries, enabling cargo to pass through without transloading from wagons and saving valuable time.
Like any other trade route for Central Asia, the success of the Middle Corridor depends on international partnerships. China and the EU are pivotal as transit cargo shippers, while Azerbaijan, Georgia, and Türkiye play critical roles as providers of infrastructure for the Middle Corridor.
3.2. The Southern Corridor
There are two routes to be highlighted as part of the Southern Corridor. The Kazakhstan-Uzbekistan-Turkmenistan-Iran highway can be used as an export route for grain products, non-ferrous metals and other high value-added products to the Middle East, South Asia, and Africa. In the long run, Iranian ports at the Indian Ocean offer access to the promising markets of South Asia, the Middle East and Africa. The Central Asian countries should ensure the availability of capacity for their own cargo in these ports.
3.3. The North-South Corridor
It is worth noting that the development of the three outlined corridors requires several measures, including a common development strategy, strong coordination and linkage of multimodal transport solutions, coordinated tariffs, and transparency of the business system for users through building financial, trade, digital, and environmental connectivity among Central Asian countries.
3.4. Critical Infrastructure Projects of Central Asia
Proposed developments for the Middle Corridor:
· creation of an international commercial organisation according to the "one-stop shop" principle;
· revision of the auto road strategy for corridor development to increase transportation volumes;
· acquisition of ferries, oil tankers and other ships in the Caspian Sea;
· creation of a network of industrial and logistics parks along the route;
· additional capacity expansion at Aktau port (Kazakhstan);
· expansion at Baku port (Azerbaijan);
· expansion of Beyneu–Aktau and Moiynty–Dostyk railways capacity (Kazakhstan);
· modernisation of border crossing points between Azerbaijan and Georgia, as well as Georgia and Türkiye;
· expansion of Baku–Tbilisi–Kars railway capacity (Azerbaijan, Georgia, Türkiye).
Proposed developments for the Southern Corridor:
· intergovernmental agreement among all partners to ensure strategic planning, including solving tariff problems;
· increase the capacity of Almaty–Tashkent–Ashgabat railway;
· expansion of the capacity of the Saryagash railway border crossing between Kazakhstan and Uzbekistan;
· consider metal exports to Iran and Türkiye and grain exports to the Middle East as part of the partnership;
· development of roadside services;
· modernisation of IT-systems at cross-border checkpoints;
· expansion of the capacity of checkpoints: Zhibek Zholy, Alat/Farab, Serakhs (Kazakhstan, Uzbekistan, Turkmenistan, Iran);
· reconstruction of the Farab-Serakhs auto road (Turkmenistan);
· capacity expansion of border crossings at Temirbaba (Kazakhstan) and Inche Burun (Iran);
· reconstruction of the Beineu-Temirbaba-Serdar-Inche Burun auto road.
Proposed developments for the North-South Corridor:
· formation of a unified marketing and communication strategy of the corridor;
· implementation of a transparent tariff policy;
· increase the throughput capacity of Bolashak (Kazakhstan) and Inche Burun (Iran) border points;
· expansion of the Bolashak border crossing capacity (Kazakhstan, Turkmenistan);
· electrification and/or construction of second track of the Garmsar–Inche Burun railway (Iran).
In May 2023, the European Bank for Reconstruction and Development (EBRD) presented the results of its study on Sustainable Transport Connections between Europe and Central Asia. The study included a proposal on key actions for the development of the transport network of Central Asia. Seven soft connectivity measures and 33 hard infrastructure investment needs were listed in the EBRD’s study.
Soft connectivity measures proposed by the EBRD’s study included digitalisation of transport documents, increased interoperability, enhanced PPP environment, trade facilitation, market liberalisation, improvements to tariff setting mechanisms, and increased funding. The figure below summarises the hard infrastructure projects proposed by the study with total investments needs of €18.5 billion.
Source: The EU and EBRD study on Sustainable Transport Connections between Europe and Central Asia
The EBRD suggests that, in case the identified investment projects and soft connectivity measures are implemented, transit container volume on the Central Trans-Caspian Network, traversing the Southern Kazakhstan, could increase to 865 thousand TEU by 2040 that is 6.7 times larger than under business-as-usual scenario (130 thousand TEU by 2040).
The successful implementation of these projects is expected to enhance cargo transit in the short term by reducing costs and delivery times. In addition, those projects aim to build a long-term logistics base for economic cooperation along the corridors. Some of the mentioned projects are already part of the BRI.
IV. Conclusion
【This article is AFCA Working Paper No. 2023-28/159】
Expert Biography
Nurlan Taiganov (MSc in Petroleum Economic and Management from École Nationale Supérieure du Pétrole et des Moteurs) is Senior Manager of Industry Analysis Department of the Astana International Financial Centre Authority. With a total 10 years of experience, he has been working for the Astana International Financial Centre since January of 2019.
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