Addressing Urban Poverty in Uzbekistan in the Context of the Economic Crisis
In contrast, countries such as Armenia, Kazakhstan and Georgia
were expected to face recession while others such as the Kyrgyz
Republic and Tajikistan were expected to have slow growth. The IMF
assumed that the sharp contraction of the Russian economy would pull
down growth across the Caucasus and Central Asia because of Russia’s
extensive trade, remittance and financial links with these economies.
For some countries, such as the Kyrgyz Republic and Tajikistan, a
slowdown in remittances was assumed to be crucial. In Uzbekistan,
where recorded remittances were almost 11% of GDP in 2007, the IMF
assumed that there could also be a significant adverse effect.
While Uzbekistan was expected to benefit from rising gas prices
despite significant declines in other exports, declining remittances and
exports were expected to reduce the country’s current account surplus
from 12.8% of GDP in 2008 to 7.2% in 2009.
The IMF noted that countries that had ample foreign-exchange
reserves, such as Uzbekistan, were not expected to face serious
exchange rate pressures. Moreover, Uzbekistan undercut the basis for
any sharp shocks to its currency’s value through a continuous process
of ‘crawling peg devaluations.’
The danger for Uzbekistan is that the major CIS countries with
which it trades were projected to experience sharp falls in GDP in 2009.
Russia’s economy was expected to shrink by 6.7% and Ukraine’s by
14%. And even Kazakhstan’s growth was expected to drop by 2%. This
is bound to have eventual knock-on effects for Uzbekistan’s economy
in 2010.
Over the medium term, the growth rates of Russia and the CIS as a
whole are projected to remain modest, rising to only moderate levels
by 2014. For example, the projected GDP growth rate for Russia in
2010 is 1.5% and that for the CIS is 2.1%. By 2014, Russia’s growth is
The predicted
impact of the
declining growth
in the Russian
economy on CIS
countries could
be mitigated
because of the
potential for
their increasing
trade and
financial links
with non-CIS
countries.
Figure 3. Uzbek Exports to Selected Countries (in millions of USD)
Source: State Statistics Committee of the Republic of Uzbekistan
11