Economic Outline

Economic Indicators

Uzbekistan has been implementing ambitious market-oriented economic reforms, which had a positive impact on the country's economy. The government is advancing significant structural economic reforms, highlighted by a substantial reduction in energy subsidies for households, slated for implementation in May 2024. This follows the liberalization of tariffs for industries in October 2023. Uzbekistan's economy demonstrates resilience against spillovers from the Ukraine war and Russian sanctions, maintaining growth rates that rank among the highest in the CIS region. The IMF estimates growth at 5.5% for 2023. Remittances from Russia, comprising 9% of GDP and 74% of total remittances in 2023, play a critical role in Uzbekistan's external finances and economic growth. For the upcoming future, the IMF forecasts growth averaging 5.5%.

Concerning public finances, in 2023, the headline budget deficit, inclusive of extrabudgetary accounts and the Uzbekistan Fund for Reconstruction and Development (UFRD), widened by 1.4 percentage points to 5.5% of GDP. This expansion significantly surpassed the original budgeted target of 3%, mainly due to delays in energy tariff liberalization, slower-than-expected reduction in subsidized lending, and lower corporate profit tax revenues resulting from short-term energy shortages in the first quarter of 2023. Fitch anticipates the deficit to decrease to 4.3% of GDP in 2024 and further to 3.9% in 2025. This reduction is expected as cuts to energy subsidies are forecasted to permanently reduce expenditure by approximately 1.5 percentage points of GDP starting from 2024. By the end of 2023, gross general government debt, inclusive of external state guarantees, stood at 36% of GDP. To meet increased financing needs due to a revised, larger deficit, authorities issued USD 660 million (equivalent to 0.7% of GDP) in a Eurobond and UZS 4.25 trillion (equivalent to 0.4% of GDP) in soum-denominated green bonds in external markets in October 2023. Fitch projects the debt to remain relatively stable in 2024-25, averaging 34.3%. As of the end of 2023, 92.6% of government debt was denominated in foreign currency. However, risks are mitigated by the high share of concessional debt, which accounts for 88% of external public debt, and the fairly long maturities, with external debt averaging 9.1 years in 2023. Inflation has consistently been elevated, averaging 13% in 2023, as reported by Fitch. Continued phases of tariff hikes, aimed at achieving full market pricing by 2027-28, are expected to pose upward risks to inflation. In 2023, the Central Bank of Uzbekistan deferred the adoption of a formal 5% inflation target from the end of 2024 to the second half of 2025, primarily due to prevailing inflationary pressures. 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.

According to the Ministry of Poverty Alleviation and Employment of Uzbekistan, the unemployment rate stood at 6.8% by the end of 2023, marking a notable decrease of 2.1% compared to the corresponding period of the previous year. The data further reveals a decrease in the poverty rate, declining from 14.1% to 11% based on the 2023 census. According to Coface, however, more than half of employment is in the informal sector. Moreover, the overall economic growth and increased urbanization in recent years contradict the persisting poverty. The World Bank estimated the country’s GDP per capita (PPP) at USD 9,535 in 2022.

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