Uzbekistan flag Uzbekistan: Economic and Political Overview

The economic context of Uzbekistan

Economic Indicators

Uzbekistan has been implementing ambitious market-oriented economic reforms, which had a positive impact on the country's economy. The government is advancing significant structural economic reforms, highlighted by a substantial reduction in energy subsidies for households, slated for implementation in May 2024. This follows the liberalization of tariffs for industries in October 2023. Uzbekistan's economy demonstrates resilience against spillovers from the Ukraine war and Russian sanctions, maintaining growth rates that rank among the highest in the CIS region. The IMF estimates growth at 5.5% for 2023. Remittances from Russia, comprising 9% of GDP and 74% of total remittances in 2023, play a critical role in Uzbekistan's external finances and economic growth. For the upcoming future, the IMF forecasts growth averaging 5.5%.

Concerning public finances, in 2023, the headline budget deficit, inclusive of extrabudgetary accounts and the Uzbekistan Fund for Reconstruction and Development (UFRD), widened by 1.4 percentage points to 5.5% of GDP. This expansion significantly surpassed the original budgeted target of 3%, mainly due to delays in energy tariff liberalization, slower-than-expected reduction in subsidized lending, and lower corporate profit tax revenues resulting from short-term energy shortages in the first quarter of 2023. Fitch anticipates the deficit to decrease to 4.3% of GDP in 2024 and further to 3.9% in 2025. This reduction is expected as cuts to energy subsidies are forecasted to permanently reduce expenditure by approximately 1.5 percentage points of GDP starting from 2024. By the end of 2023, gross general government debt, inclusive of external state guarantees, stood at 36% of GDP. To meet increased financing needs due to a revised, larger deficit, authorities issued USD 660 million (equivalent to 0.7% of GDP) in a Eurobond and UZS 4.25 trillion (equivalent to 0.4% of GDP) in soum-denominated green bonds in external markets in October 2023. Fitch projects the debt to remain relatively stable in 2024-25, averaging 34.3%. As of the end of 2023, 92.6% of government debt was denominated in foreign currency. However, risks are mitigated by the high share of concessional debt, which accounts for 88% of external public debt, and the fairly long maturities, with external debt averaging 9.1 years in 2023. Inflation has consistently been elevated, averaging 13% in 2023, as reported by Fitch. Continued phases of tariff hikes, aimed at achieving full market pricing by 2027-28, are expected to pose upward risks to inflation. In 2023, the Central Bank of Uzbekistan deferred the adoption of a formal 5% inflation target from the end of 2024 to the second half of 2025, primarily due to prevailing inflationary pressures. The Government's aims to transform Uzbekistan into an industrialised, upper-middle-income country by 2030, and has recently announced plans to modernise the agriculture sector, reduce its ownership of state-owned assets and enterprises, and address constraints in the financial markets.

According to the Ministry of Poverty Alleviation and Employment of Uzbekistan, the unemployment rate stood at 6.8% by the end of 2023, marking a notable decrease of 2.1% compared to the corresponding period of the previous year. The data further reveals a decrease in the poverty rate, declining from 14.1% to 11% based on the 2023 census. According to Coface, however, more than half of employment is in the informal sector. Moreover, the overall economic growth and increased urbanization in recent years contradict the persisting poverty. The World Bank estimated the country’s GDP per capita (PPP) at USD 9,535 in 2022.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 81.1790.8897.96109.85123.10
GDP (Constant Prices, Annual % Change) 5.76.05.25.45.5
GDP per Capita (USD) 2,3012,5232,6662,9313,220
General Government Gross Debt (in % of GDP) 33.936.336.035.033.9
Inflation Rate (%) 11.410.011.69.77.7
Unemployment Rate (% of the Labour Force) 8.98.47.97.46.9
Current Account (billions USD) -0.62-4.49-4.83-5.00-5.69
Current Account (in % of GDP) -0.8-4.9-4.9-4.5-4.6

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Uzbekistan has a workforce of 13.97 million out of its 34.9 million population (World Bank, latest data available). Agriculture plays a major role in the economy; it accounts for 23.5% of GDP and employs 26% of the total workforce. Main agricultural products include cotton, wheat, barley, rice, maize, potato, vegetables, fruits, and livestock. The country also produces silk and wool and is attempting to diversify its agriculture towards fruits and vegetables. Only 9% of the country’s land is considered arable. According to the Statistics Agency, the total value of agricultural, forestry, and fisheries products/services in 2023 amounted to 426.3 trillion soums, equivalent to USD 34.8 billion, marking a 4.1% increase from the previous year. In terms of agricultural output, 2023 saw the production of 8.4 million tons of grain products, 3.6 million tons of potatoes, 11.6 million tons of vegetables, 2.4 million tons of melon crops, 3.1 million tons of fruits and berries, and 1.7 million tons of grapes.

The industrial sector accounts for 31.1% of GDP and employs 24% of the total workforce (World Bank). Manufactured products included textiles, food processing, machine building, metallurgy, mining, hydrocarbon extraction, and chemicals. Uzbekistan boasts the world's fourth-largest gold reserves and holds the twelfth position globally and second among the CIS countries in terms of mining. Metallurgy stands out as one of the nation's largest domestic industries, with copper, gold, silver, and uranium being the most extensively mined minerals. The oil and gas sector serves as a primary pillar of Uzbekistan's GDP, contributing substantially to its budget revenues, foreign exchange earnings, and industrial production framework. Additionally, it plays a crucial role in attracting investment to the country. Uzbekistan holds the position of the second-largest natural gas producer in Central Asia and is recognized for its substantial hydrocarbon reserves. By the conclusion of 2023, industrial production experienced a notable 6% increase, exhibiting positive growth across all key sectors. The manufacturing industry emerged as the primary catalyst for industrial growth, demonstrating the most significant structural changes. Output of manufacturing products surged by 6.7%, showcasing robust dynamics in the sector.

The services sector accounts for 35.5% of GDP and employs 50% of the total workforce (World Bank). Key services include transportation and tourism. In 2023, Uzbekistan experienced a significant rise in foreign visitors, with a total of 6.6 million foreigners visiting the country. This marked a notable increase of 26.9% compared to the previous year, as reported by the Statistics Agency. By the end of September 2022, Uzbekistan's banking sector represented 69.7% of the country's GDP. The dominance of large state-owned and state-controlled banks persists within the sector, with only five such banks managing 61% of all assets in the banking sector (data OECD). Overall, the service sector witnessed a growth of 6.8% in 2023. Within this sector, trade, encompassing accommodation and catering services, saw an increase of 10.2%. Transportation and storage, along with information and communications, experienced a growth of 12.3%, while other service industries grew by 4.5%.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 23.9 25.4 50.6
Value Added (in % of GDP) 23.5 31.1 35.5
Value Added (Annual % Change) 3.6 5.5 8.5

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
58,3/100
World Rank:
108
Regional Rank:
21

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.
 

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Sources of General Economic Information

Ministries
Ministry of Economy
Ministry of Finance
Statistical Office
State Committee of Statistics
Central Bank
Central Bank of the Republic of Uzbekistan
Stock Exchange
Republican Stock Exchange
Economic Portals
Economic portal
 

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Latest Update: May 2024

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