Theory of economics

Analysis of key macroeconomic indicators in the economy of Uzbekistan in 2020.

For the latest forecasts on the economic impacts caused by the coronavirus pandemic, please consult the OECD Economic Outlook Interim Report Coronavirus: the world economy at risk (March 2020) and the IMF's policy tracking platform Policy Responses to COVID-19 for the key economic responses from governments.

Uzbekistan is implementing ambitious market-oriented economic reforms. A surge in investment and a pickup in consumption boosted GDP growth to 5.6% in 2019.  Public investment in industrial facilities, infrastructure (gas, hydroelectric, roads, and housing) - as well as household consumption (more than 50% of GDP) - promoted growth.

Abundant and varied natural resources, low public debt, solid foreign exchange reserves, aggressive investment programmes, a growing labour force, and a strategic geographic position between China and Europe further factor into Uzbekistan's economic development. According to the updated IMF forecasts from 14th April 2020, due to the outbreak of the COVID-19, GDP growth is expected to slow down to 1.8% in 2020 and pick up to 7% in 2021, subject to the post-pandemic global economic recovery, conclusion of the market reforms opening new prospects for export-led growth and addressing production bottlenecks and regulatory constraints.

According to the IMF, government debt in 2019 grew to 23.3% of GDP in 2019 and is expected to rise in 2020 (24.8%). Increasing, periodic price increases for utilities keep inflation high in 2019(14.5%), but it should decrease to 12.6% in 2020 and 10.6% in 2021 (April 2020 World Economic Outlook IMF). Tightening of monetary and credit policies will be required for inflation to moderate in the coming years. Budget surplus fell to 0.6% in 2019 and is expected to decrease further in 2020 (0.3%) and 2021 (0.2%).  Key economic challenges include lack of economic diversification, reliance on commodity prices, a large informal economy, low economic competition, an underdeveloped banking sector, and state intervention in credit, prices, administrative, and custom affairs (COFACE). The Government has focused on reforming public finances at a 2.5% of GDP cost in 2019. The 2017-2021 strategic plan includes reforming bureaucracy, establishing rule of law, opening the economy, and promoting, education, health, and infrastructure to attract private investments and reduce both unemployment and poverty.

The Government's aims to transform Uzbekistan into an industrialized, upper-middle-income country by 2030, and has recently announced plans to modernize the agriculture sector, reduce its ownership of state-owned assets and enterprises, and address constraints in the financial markets.

The official unemployment rate was 9.1% in the first half of 2019 (World Bank), although this severely underestimates the size of the informal sector. The country is threatened by radical Islamist movements and its tense relations with Kyrgyzstan. Moreover, the overall economic growth and increased urbanisation in the recent years contradict with the persisting poverty. Other risks include resolving border disputes, water issues, and food security.