The economy of Uzbekistan is characterized by dynamic development. Since 2017, reforms have been carried out in the country, the purpose of which is to move from excessive state participation towards a market model and trade liberalization. As a result, Uzbekistan has demonstrated steady growth rates, despite global challenges, due to the actively developing private sector. In addition, the stimulating factors of economic growth are rich natural resources, including gas, gold and copper, a young population and a favorable geographical location between major economic centers — Russia and China. Nevertheless, the country has a high unemployment rate and a low level of urbanization.
In 2020, there was a significant reduction in GDP growth rates against the background of the COVID-19 pandemic due to a decrease in trade volumes, profits from tourism and remittances from abroad. Despite this, the economic growth rate was 1.9%.
In 2021, Uzbekistan demonstrated a rapid recovery, and real GDP growth reached 7.4%. Nevertheless, geopolitical instability in 2022 has become another challenge for the economy of Uzbekistan. According to the IMF, growth was 5.2%, while Oxford Economics estimates GDP growth at 5.1%. The main factors contributing to the preservation of positive dynamics include an increase in the volume of remittances from abroad, continued fiscal support and sustainable domestic consumption.
In 2023, a further reduction in GDP growth is expected, which will inevitably cause a drop in real incomes of the population. On the other hand, the ongoing reforms and the active development of economic relations with the main trading partners (Russia and China) favor moderate growth in the coming years. According to the IMF forecasts, in 2023 growth will be 4.7%, and then it will stabilize at 5.0% per year. Oxford Economics forecasts suggest higher growth rates in the medium term at a level exceeding 6% per year. Estimates of economic growth indicators by the end of 2023 The Central Bank of Uzbekistan also corresponds to the IMF and Oxford Economics and accounts for 4.5–5.0%.
The level of inflationary pressure in Uzbekistan continues to remain at an extremely high level due to a sharp rise in food prices against the backdrop of high world quotations and worsening problems with the global supply chain. The highest inflation rates were observed in July–August and November–December at the level of 12.3%, which significantly exceeds the target of the Central Bank of Uzbekistan, set at 5%. In February 2023, inflation was 12.2%.
According to the IMF, the average annual level of inflationary pressure in 2022 was 11.2%. To combat the rise in food prices, the Government has strengthened social support measures. Also, in order to support households, the government will not raise electricity and gas tariffs. In addition, since July 15, Uzbekistan has temporarily restricted the export of gasoline and diesel fuel to solve the problem of rising domestic prices. These measures, as well as the implementation of a tight monetary policy by the Central Bank, which has set the interest rate at 14% per annum, can help reduce inflationary pressure in the medium term. According to the IMF forecast, in 2023 Inflation will be 10.8%, which significantly exceeds the estimates of the Central Bank of Uzbekistan, the base scenario of which assumes inflation at the level of 8.5–9.5%.
Development targets in accordance with the new development strategy of Uzbekistan for 2022-2026: an increase in GDP per capita by ensuring consistently high growth rates in economic sectors, reducing the annual inflation rate to 5%, reducing the state budget deficit to no more than 3% of GDP, maintaining newly attracted external debt at a level not exceeding 4.5 billion US dollars, an increase in the share of industry in the GDP structure and a 1.4-fold increase in the industry's output, attracting investments in the amount of 120 billion US dollars in the next five years. US$ 70 billion, including US$ 70 billion of foreign investment, bringing the stock market turnover from US$ 200 million to US$ 7 billion, bringing export volumes in 2026 to US$ 30 billion, bringing the share of the private sector in GDP to 80%, in exports to 60%, ensuring the growth of agricultural volumes by at least 5% due to intensive development.
