Uzbekistan: macroeconomic stability as a vector of development

Today, the economy of Uzbekistan - one of the largest in the Central Asian region – has been actively and steadily developing in recent years. In 2021, GDP amounted to $397 billion (62nd place in the world).

Uzbekistan is an agro-industrial country. In agriculture, the main activities are the cultivation of cotton, cereals (including wheat, corn and rice), fruits and vegetables, melons and tobacco, animal husbandry (in particular, sheep farming).
The republic is one of the five world cotton producers (China, USA, India, Pakistan, Uzbekistan), most of which is exported.
In recent years, our country has received sovereign credit ratings from reputable rating agencies Fitch and Standard&Poor's at the BB level - with a stable outlook, reflecting the degree of readiness of the state to fulfill its financial obligations in a timely and full manner. This made it possible to successfully place five- and ten-year Eurobonds totaling one billion dollars.
Uzbekistan's economy has grown in six years from $53 billion to $82 billion in 2022, and GDP per capita increased from $1,604 in 2018 to 2,255 in 2022.
Exports were based on manufactured goods (26 percent of total exports), gold and precious metals (25), services (15), food (8). Imports include machinery and equipment (32 percent), finished products (19), chemicals (14), food (10), services (7).
The inflow of investments increased from $3.3 billion in 2017 to $9.8 billion in 2022. The volume of exports increased from 12.6 billion (2017) to 19.3 billion (2022). The range of exported products has expanded from 1.5 thousand to three thousand items. Geography - from 139 to 164 countries.
The volume of mutual trade between the Central Asian countries increased 2.6 times - from 4.2 billion dollars in 2016 to 11 billion in 2022, and the number of joint ventures increased fivefold. Our main trading partners are Russia (18%), China (18), Kazakhstan (9), Turkey (8), South Korea (5), Kyrgyzstan (2) and Turkmenistan (2).
Agriculture in Uzbekistan is one of the leading industries. It provides more than 28 percent of the gross domestic product. About 4.2 million people are involved here, which is more than 30 percent of the total employment in the republic. Among the fastest growing areas are electrical engineering, machine building, metalworking, light industry, gas industry, as well as automotive and consumer goods production.
The prospects for the development of these industries directly depend on agriculture, since the country's economy is aimed at using domestic raw materials for the production of goods. The textile segment has been actively developing in recent years. At the same time, great attention is paid to increasing the level of domestic processing of cotton fiber and increasing export potential.
One of the main areas of investment growth in our country is participation in the World Trade Organization (WTO). Thus, according to the estimates of the Center for Economic Research and Reforms under the Administration of the President of the Republic of Uzbekistan, after joining the WTO, one can expect a reduction in trade costs and, as a result, a significant increase in GDP and the welfare of the population. In particular, with trade liberalization, economic growth will reach the level of 0.4-0.5 percent, and welfare - 0.9-1.
Uzbekistan supports WTO membership and at the same time is working to diversify its trading partners.
It is particularly worth noting the ongoing liberalization of import duties, which is very important for improving the welfare of the population. The sphere of technical regulation is being reformed, where Uzbekistan is adapting to WTO norms and standards, including reviewing non-tariff trade barriers.
However, the potential of such traditional industries for foreign investment as fuel and energy and mining, agriculture and textile production has not been fully realized.
There are also significant development prospects in relatively new areas for the republic: the financial and banking sector, construction, telecommunications and tourism. With current low interest rates in countries with developed capital markets, Uzbekistan, with its rapidly growing opportunities for higher returns, looks attractive to foreign investors.
It should be recognized that Uzbekistan has the advantage of macroeconomic stability, which, combined with ongoing reforms, opens up opportunities in various sectors of the economy, be it financial services, construction or tourism. The investment potential for the next ten years, according to the Boston Consulting Group, reaches $65 billion, of which non-resource industries account for up to $20 billion.

Firdavs Safarov,
Senior Researcher 
Institute of Legislation and Legal Policy 
under the President of the Republic of Uzbekistan