BISHKEK, Kyrgyzstan — A construction boom is reshaping the capital city of Bishkek and transforming Kyrgyzstan’s economy, driven in part by the ripple effects of Russia’s ongoing war in Ukraine. The landlocked Central Asian nation, home to roughly seven million people, has seen rapid growth amid shifting trade flows and surging public investment.

At the center of the boom is Mirlan Akzhigitov, a developer overseeing the Royal Tower, poised to become Kyrgyzstan’s first skyscraper when completed later this year. His company, Royal, is managing 24 concurrent construction projects, reflecting an intense wave of activity throughout the country. The skyline of Bishkek is dotted with cranes while infrastructure projects including roads, airports, stadiums, and government complexes are under way.

Kyrgyzstan’s economic surge is closely linked to its role as a transit hub for goods diverted around Western sanctions imposed on Russia following its invasion of Ukraine in 2022. With major corporations pulling out of Russia, Kyrgyzstan has become a key conduit for Chinese and Western products destined for the Russian market. Electronics, vehicles, and dual-use goods have flowed through the country, benefiting from the Eurasian Customs Union’s duty-free regime. The Asian Development Bank estimates that re-export activity has accounted for 30 to 40 percent of Kyrgyzstan’s growth over the past four years.

The country’s gross domestic product expanded by 11 percent last year, boosted also by rising gold prices and growth in the cryptocurrency and financial sectors. State-led capital investments have increased significantly, with government spending on infrastructure rising sixteenfold since 2021. Tax and customs reforms under President Sadyr Japarov, who came to power in 2020 and maintains close ties with Moscow, have further strengthened the fiscal base, with reported jumps in tax and customs revenues.

Despite the economic boom, Kyrgyzstan is navigating complex geopolitical pressures. Moscow has sought to curb trade practices perceived as undermining Russian tax revenue, especially regarding gray-market vehicle imports. Western nations, meanwhile, have sanctioned certain Kyrgyz entities for facilitating transactions linked to the Kremlin’s war efforts. Kyrgyz officials emphasize their heavy economic dependence on Russia, particularly for energy and raw materials, while hoping to decouple economic cooperation from political disputes.

Prime Minister Adylbek Kasymaliev highlighted ongoing infrastructure projects including 900 miles of new roads per year, expanding railway connections to China and Uzbekistan, and modernizing 11 regional airports. He also noted increased industrial production and improvements in tax collection as contributors to sustained growth. At the same time, Kasymaliev acknowledged challenges including a decline in remittances from Kyrgyz workers in Russia.

The boom has fueled demand for upscale real estate in Bishkek, with luxury complexes catering to a growing class of affluent buyers, many linked to finance, construction, logistics, and political circles. However, rising inflation, near 11 percent, has undercut purchasing power for low-income households and heightened concerns about economic inequality. Economists warn of overheating and question the durability of this rapid expansion.

Many Kyrgyz families continue to face economic hardship even as some benefit from new wealth. Real estate remains a favored investment, seen as a safeguard against financial volatility. Developers like Akzhigitov report flexible payment arrangements, sometimes accepting unconventional collateral, reflecting local practices.

While the current economic momentum has lifted parts of Kyrgyzstan, skeptics caution that growth may slow as external pressures mount. Still, officials remain optimistic about sustained development, framing it as essential to national progress. “Our only path is growth,” Kasymaliev said, underscoring a determination to navigate the complexities of the regional and global environment in the years ahead.