Republic of Uzbekistan
Federation of Euro-Asian Stock Exchanges
Economic growth accelerated to 5.1 percent in 2018, reflecting the high value-added growth in the industry and construction sectors. Domestic demand remained robust due to the strong 18.1 percent growth in domestic investment, supported by large increases in government lending to capital investments in SOEs.
Total lending that went to capital modernization also contributed to a 26 percent increase in imports compared to 2017, half of which was the import of capital goods. After years of surplus, the increase in imports, combined with only a modest increase in exports, contributed to a large current account deficit in 2018 totaling around 8 percent.
Despite an increase in revenue collections, the Government’s large lending to SOEs also contributed to an overall fiscal deficit of 2.5 percent of GDP in 2018.
Annual inflation remained high, averaging 17.9 percent in 2018, mainly due to the effects of the 2017 exchange rate unification, wage increases, and the removal of administrative price controls.
The banking sector remains well capitalized and stable primarily because of large capital injections from the Uzbekistan Fund for Reconstruction and Development. World Bank estimates of the poverty rate (using the lower-middle-income country poverty line adjusted for purchasing power parity) was 9.6 percent in 2018. The official unemployment rate by the end of 2018 was 9.3 percent.
Economic growth is projected to be 5.3 percent in 2019 and to converge to about 6 percent by 2021. Reductions in tax rates and the implementation of reforms to liberalize high-potential growth sectors of the economy, including horticulture, food processing, tourism, textiles, and chemicals, are expected to contribute to higher growth over the medium term.
Inflationary pressures are expected to persist over the medium term as a result of further market reforms and wage increases. Inflation is expected to moderate by 2021.
Economic Development and Outlook
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