Uzbekistan: Economic and Political Overview

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID.

Uzbekistan has been implementing ambitious market-oriented economic reforms, which, before 2020 had a positive impact on the country's economy. However, in 2020, the country recorded its worst economic performance in over two decades mainly due to the impacts of the COVID-19 pandemic (such as weak domestic demand and private consumption, as well as a decline in tourism and in remittances from Uzbeks abroad). Still, GDP growth remained positive at 1.9% before jumping again at +7.4% in 2021 and +5.2% in 2022. It is expected to stabilise at a high level in 2023 (4.7%) and 2024 (4.9%), 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.The rebound in remittances and the increase in social spending are expected to continue boosting domestic demand in 2023. Moreover, 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 looming economic development.

According to the IMF, government debt grew to an estimated 35.8% of GDP in 2021 and 34.1% in 2022, and is expected to reach 33.1% in 2023 and 30.8% in 2024. Periodic price increases for utilities kept inflation high in 2021 (10.8%) and 2022 (11.2%) and the recovery in domestic demand is expected to keep inflation high in 2023 (10.8%) before a relative slow down at 9.5% in 2024 (IMF, January 2023). Tightening of monetary and credit policies will be required for inflation to moderate in the coming years. The current account deficit of USD 3.96 billion increased due to the decline in remittances and a trade deficit driven by purchases to diversify the economy. In 2022, the deficit is expected to further increase with the rebound in imports, reaching USD 4.1 billion or -5.6% of GDP. Key economic challenges in Uzbekistan 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, 2022). The Government's 2017-2021 strategic plan included 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 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. In 2020-2021, the Uzbek government's efforts to mitigate the economic impact of the COVID-19 pandemic included additional spending on health care (including for medicines, the costs of quarantines, and salary supplements for healthcare workers) and social assistance (as there was an increase in the number of families with children and low-income families receiving social benefits), as well as international financial support (from the World Bank, the IMF, and the ADB). The government created an Anti-Crisis Fund of USD 1 billion (about 2% of GDP), temporary reduced some taxes, postponed the payment of property and land taxes, extended a moratorium on tax audits, and delayed tax declarations for 2019 income taxes.

According to the Ministry of Employment and Labour Relations of Uzbekistan, the unemployment rate was 9.5% in 2021 and 10% in 2022. However, this rate severely underestimates the size of the informal sector. According to Coface, 58% of employment is in the informal sector, which was the hardest hit by the COVID-19 pandemic. Moreover, the overall economic growth and increased urbanisation in the recent years contradict the persisting poverty. The country is threatened by decades-long tense relations with Kyrgyzstan along the border. However, emerging economic ties and warming social relations between the two countries give hope to a friendly resolution of the issue. Other risks include resolving border disputes, water issues, and food security. The continued expansion of social assistance and public investments to improve rural infrastructure, and vaccination costs, will continue to elevate public spending in 2022 and 2023. This will be partially offset by higher tax, mining, and privatization revenues, leading to an overall fiscal deficit of 5.5% of GDP in 2021. COVID-19 uncertainties and a forthcoming VAT rates reduction in 2023, are likely to contribute to a higher medium-term fiscal deficit. A robust economic recovery, the gradual withdrawal of anti-crisis measures, and tax administration reforms to widen the tax base are projected to help consolidate public finances and stabilise debt at about 33% of GDP by end-2023.

Main Sectors of Industry

Uzbekistan has a workforce of 14.1 million out of its 35.7 million population (World Bank, 2023). Agriculture plays a major role in the economy; it accounts for 25% 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. Poland, Russia, and the Netherlands have strengthened agricultural relations with Uzbekistan. According to a report by the Uzbek Centre for Economic Research and Reform and the United Nations Development Program in Uzbekistan, the country's agriculture sector was the least affected by the COVID-19 pandemic, along with both the forestry and the fishing industries.

The industry accounts for 32% of GDP and employs 23% of the total workforce (World Bank, 2023). Manufactured products included textiles, food processing, machine building, metallurgy, mining, hydrocarbon extraction, and chemicals. The country is also rich in coal, zinc, copper, tungsten, uranium, and silver. Although the industrial sector suffered with the pandemic, 43% of the Uzbek Anti-Crisis Fund - an economic package implemented to mitigate the negative impact of the pandemic on the country’s economy - was allocated to the industrial sector, including thermal power plants, regional power networks, oil and gas networks, air transport, and the rubber industry.

The services sector accounted for 35.7% of GDP and employs 51% of the total workforce (World Bank, 2023). Key services include transportation and tourism. Uzbekistan was the fourth fastest growing country for tourism in 2019 (+27.3%), receiving 6.7 million tourists (United Nations World Tourism Organization). Tourism has resumed growth in 2022 following the pandemic.

 

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	25.7	23.0	51.3
Value Added (in % of GDP)	25.0	32.0	35.7
Value Added (Annual % Change)	4.0	8.4	9.2

Source: World Bank - Latest available data.

 

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Monetary Indicators	2016	2017	2018	2019	2020
Uzbek Sum (UZS) - Average Annual Exchange Rate For 1 MUR	83.39	54.82	237.80	248.92	255.53

Source: World Bank - Latest available data.

 

 

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Indicator of Economic Freedom

Definition

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

 

 

Foreign Trade in Figures

According tot the latest available data by the World Bank, Uzbekistan's foreign trade represented 64% of GDP in 2021 (World Bank, 2023). As a producer of oil, natural gas, and gold and as the 6th largest producer of cotton, natural resources dominate the country’s exports. Uzbekistan’s other exports include machines and equipment, and food. The country exports pearls, gold, precious stones, metals and coins (45%), cotton (9%), mineral fuels, oils, distillation products (5.9%) and copper (5.5%). Imports include machinery, nuclear reactors, boilers (24%), vehicles other than railway, tramway (9.2%), iron and steel (6.2%) and pharmaceutical products with 5.8% (Trading Economics, 2022). Uzbekistan total Exports expanded 25.2% Year on Year in Mar 2021, compared with a decrease of 38.9 % Year on Year in the previous month.

In 2022, main export destinations included Russia (17% of all exports), China (11.5%), Turkey (9.5%) and Kazakhstan (8.2%). Imports arrived from China (22.4%), Russia (21.4%), Kazakhstan (11.4%), South Korea, and Turkey. As of 2022, Uzbekistan has trade relations with over 140 countries and has signed trade agreements with 45 countries. In 2020, the country became an observer in the Eurasian Economic Union, and although Uzbekistan is not a member of the WTO yet, the nation is working on accession. Additionally, the UAE and Uzbekistan have agreed to expand their partnership and  increase trade volume and investments in textiles, renewable energy, infrastructure, and agriculture. A large trade and logistics centre will also be constructed in the border areas of Kazakhstan and Uzbekistan.

According to WTO data for 2021, Uzbekistan exported goods for total value of 14.08 billion USD, while it imported goods for a total value of 23.74 billion USD. As for commercial services, Uzbekistan exported 2.25 billion USD and imported 4.72 billion USD worth services. As a result, the country had a negative trade balance including services of 11.37 billion USD in 2021 (WTO, 2023).

Sources of General Economic Information

Ministries

Official list of ministries and their links
Ministry of Economy
Ministry of Finance
Ministry of Investments and Foreign Trade

Statistical Office

State Committee of Statistics

Central Bank

Central Bank of the Republic of Uzbekistan

Stock Exchange

Republican Stock Exchange

Search Engines

Uztrade

Economic Portals

Economic portal

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