The Impact of Inflation on Poverty in Different Regions of Kyrgyzstan in the context of the COVID-19.

Abstract

This research paper aims to analyze the influence of inflation on poverty across different regions of Kyrgyzstan in the context of the COVID-19 pandemic. The COVID-19 pandemic has significantly exacerbated poverty levels in Kyrgyzstan, with inflation playing a pivotal role by eroding the purchasing power of households. The analysis reveals notable regional disparities, indicating that the impact of inflation on poverty varies significantly across different areas. This study employs Random Effects Model (REM) to examine the impact of inflation on poverty. The findings of this study demonstrate that inflation has had a consistent and significant impact on poverty in Kyrgyzstan, both during and after the COVID-19 pandemic, intensifying economic vulnerability and disproportionately affecting the most disadvantaged regions. In addition to inflation, the analysis examines the roles of gross regional domestic product (GRDP), unemployment rate (UR), and the COVID- 19 pandemic (as a dummy variable). GRDP shows a negative relationship with poverty, highlighting the protective effect of economic growth, while the UR variable presents counterintuitive results due to limitations in unemployment data. The COVID-19 dummy reveals a significant positive impact on poverty, reflecting the pandemic's role in worsening economic conditions. These results emphasize the need for targeted, region-specific policies to address inflation and mitigate its adverse effects on poverty.