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Kyrgyz 2012 GDP shrinks after gold output collapse

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* Lower gold venture output drags down rickety economy

* Centerra may face new problems in Kyrgyzstan soon

By Olga Dzyubenko

BISHKEK, Jan 14 (Reuters) - Kyrgyzstan's gross domestic product, hit by the output collapse at the country's flagship gold venture with Canada's Centerra Gold, shrank by 0.9 percent in 2012 after a 6 percent rise a year earlier, official statistics showed on Monday.

Hit by lower production at the Kumtor mine, the largest gold venture run by a western-based company in Central Asia, industrial output dwindled by 20.2 percent last year compared to an 11.9 percent increase in 2011, the National Statistics Committee reported.

Kumtor alone accounted for 12 percent of Kyrgyzstan's GDP and more than a half of its exports in 2011.

The venture was forced to cut its 2012 production outlook to 415,000 to 425,000 ounces of gold from a previous estimate of 450,000, due to ice movement at the open-pit mine located in a high-altitude permafrost area near the border with China.

The Canadian miner's woes in the politically unstable nation may get worse in the coming weeks as Kumtor faces a $152 million environmental damages claim from Kyrgyzstan's government.

Centerra Gold said the claim was "exaggerated or without foundation," but it could not be sure that the matter could be resolved without a material impact on the company.

Nationalist parties, influential in Kyrgyzstan where two presidents have been deposed in violent revolts since 2005, demand that Kumtor should be nationalized. The government of Zhantoro Satybaldiyev has rejected such calls.

A mainly Muslim nation of 5.5 million, which hosts both U.S. and Russian military air bases, Kyrgyzstan is one of the poorest former Soviet republics. Its per capita GDP is less than a tenth of neighboring Kazakhstan's.

Apart from Kumtor, remittances from Kyrgyz migrant workers employed mainly in Russia help keep the rickety economy afloat.

Without taking Kumtor's output into account, Kyrgyzstan's GDP would have actually expanded by 5 percent last year against a 6.3 percent rise in the same comparison in 2011, official statistics showed.

Kyrgyzstan's inflation accelerated to 7.5 percent in 2012 from 5.7 percent in 2011.

From January through November 2012, Kyrgyzstan exported 2.3 times less gold than in the same period of 2011, official statistics said without giving absolute figures. In the first 11 months of 2012, Kyrgyzstan had a foreign trade deficit of $3.3 billion. (Writing by Dmitry Solovyov; Editing by Stacey Joyce)

http://www.globalpost.com/dispatch/news/thomson-reuters/130114/kyrgyz-2012-gdp-shrinks-after-gold-output-collapse