FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2012
“TOSHKENT” REPUBLICAN STOCK EXCHANGE
CAPITAL MARKET DEVELOPMENT AND ECONOMIC OUTLOOK
Despite the global recession and economic
contraction among its major trading partners,
Uzbekistan continued its strong economic
performance in 2009 with GDP growth of 8.1%.
The economy was affected by the recession
through weaker external demand and lower
remittance inflows.
The government responded to the recession
early with a large-scale anticrisis program
for 2009–2012, which was adopted at end-
2008. Measures included substantial public
infrastructure investment, tax preferences to
exporting industries and small and medium-
sized enterprises, increases in public sector
wages, and recapitalization of commercial
banks. The program was financed through the
government budget, state-owned enterprises
(SOEs), and the Fund for Reconstruction
and Development (FRD), a sovereign wealth
management fund established in 2006.
Healthy budget revenues and good export
performance of gold and natural gas supported
the program’s implementation. As a result,
GDP growth was sustained by output gains in
industry, including construction (11.2%) and
services (14.0%). Nonconstruction industrial
growth is attributable to increased production of
hydrocarbons, machinery, and chemicals, which
together accounted for 42% of total industrial
production. These three subsectors combined
posted growth of 13.1%. The performance of
other industrial subsectors was more modest,
with the output of nonferrous metallurgy (mainly
gold, silver, and copper) growing by 2.6%.
Within industry, construction shot up by 33.1%.
This gain was driven primarily by an increase
in fixed capital investment. According to
official data, such investment rose by 24.8% in
2009. Construction output was lifted by public
infrastructure development projects in rural
areas. Notable sources of construction demand
were large SOEs under government-led sector
modernization and renovation programs
(primarily manufacturing and mining). The share
of fixed capital investment in GDP increased
from 23.0% in 2008 to an estimated 26.1% in
2009. Rapidly growing telecommunications
and financial markets were one of the major
contributors to growth in services: mobile
subscriber numbers have increased 10-fold in
less than 4 years. The financial services market
is growing fast in areas of microfinancing and
bank debit card processing. In response to
rising demand for credit from microenterprises,
especially in rural areas, the volume of
microfinance lending reached US$ 200 million
in 2009.
The government reported that foreign direct
investment in 2009 increased by 80% from
2008. The bulk of the increase came from
expansion of activities in the hydrocarbons
and communications sectors. In December
2008, the government established the first free
industrialeconomic zone in the Navoi region
(FIEZ Navoi), which provides tax and customs
preferential facilities for foreign investors. By
end-2009, the government had signed 37
investment agreements with various foreign
investors for FIEZ Navoi amounting to more than
US$ 500 million. The first investment outlays are
expected this year.
The latest estimate of the year-average
consumer price index by the International
Monetary Fund is 12.5%. Broad money growth
is estimated at 34.0% in 2009. The depreciation
of the local currency supported exports. Sharp
falls in the Kazakhstan tenge and Russian
ruble against their respective major trade
partners added downward pressure on the
nominal exchange rate. The main elements
of the anticrisis program implemented
through fiscal policy were recapitalization
of commercial banks to support lending;
increased public infrastructure development
to support job creation; and tax exemptions
to support exporting industries and small and
mediumsized enterprises. The government
also increased public sector wages by 40%
on average in 2009. These expenditures were
offset by strong revenue receipts stemming
from high export prices (especially for gold and
gas) and tax reforms. The general government
budget is estimated to have posted a surplus
of 0.2% of GDP in 2009. Including the FRD, the
consolidated budget surplus is estimated at
4.4% of GDP
The crisis had impacts on exports and
remittances. Exports to Uzbekistan’s main
markets, namely Kazakhstan, the Russian
Federation, and Ukraine, and remittances from
Kazakhstan and the Russian Federation, were
heavily affected. Nonhydrocarbon exports
contracted by 11% in 2009. Machinery (with a
61% decrease to US$ 341 million) and cotton
(a 6% drop to US$ 1.0 billion) were among the
worst hit, but their lower export revenues were
offset by strong global demand for gold and
income from natural gas sales to the Russian
Federation (the largest customer). Hydrocarbon
Key Information Contacts
State Property Committee www.spc.gov.uz
Ministry of Finance www.mf.uz/eng
National Bank of Uzbekistan http://eng.nbu.com/about/history/index.php
State Central Securities Depository www.deponet.uz/english.shtml
Portal of the State Authority www.gov.uz/en
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