Markets for the country’s highly specialized industries disappeared and the high cost of fuel imports—subsidized during the Soviet era—drained the country’s money reserves. By 1995 the gross domestic product (GDP), which measures the total value of goods and services, had fallen to 54 percent of its level in 1990. Beginning in the mid-1990s, however, the economy began to reverse its decline, led by increased agricultural output and a growing private sector. In 1999 the GDP was an estimated $1.25 billion.

Industrialization has stimulated the mechanization of agriculture in Kyrgyzstan, and many types of machines necessary to cope with the largely mountainous terrain are manufactured in the republic. Unlike other Central Asian countries, Kyrgyzstan does not suffer from a lack of water; irrigation canals have increased agricultural output substantially, especially cotton production in the Fergana Valley, the country's main source for that crop. Livestock raising, the cultivation of cotton, fruit, vegetables, cereal grains, and tobacco, and wool production are the leading branches of agriculture.

Kyrgyzstan is a small, poor, mountainous country with a predominantly agricultural economy. Cotton, wool, and meat are the main agricultural products and exports. Industrial exports include gold, mercury, uranium, and electricity. Kyrgyzstan has been one of the most progressive countries of the former Soviet Union in carrying out market reforms. Following a successful stabilization program, which lowered inflation from 88% in 1994 to 15% for 1997, attention is turning toward stimulating growth. Much of the government's stock in enterprises has been sold. Drops in production had been severe since the breakup of the Soviet Union in December 1991, but by mid-1995 production began to recover and exports began to increase. Pensioners, unemployed workers, and government workers with salary arrears continue to suffer. Foreign assistance played a substantial role in the country's economic turnaround in 1996-97. Growth was held down to 2.1% in 1998 largely because of the spillover from Russia's economic difficulties, but moved ahead to 3.6% in 1999 and an estimated 5.7% in 2000. The government has adopted a series of measures to combat such persistent problems as excessive external debt, inflation, and inadequate revenue collection.