Uzbekistan is Central Asia’s most populous country, comprising nearly half of the region’s total. The country has over 1,800 mineral reserves with substantial deposits of gold, copper, uranium, coal and natural gas.
The economy experienced the smallest contraction among its peers after the collapse of the Soviet Union in 1991. The country managed to increase its nominal GDP by 19x to US$ 67.1bn between 1992 and 2016. However, this was not sufficient to raise the living standards of the population with per capita GDP at US$ 2,124 in 2016 – one of the lowest globally, albeit up from US$ 167 in 1992.
Solid economic growth was insufficient for quality job creation given the rapidly increasing labor force. Uzbekistan’s annual average real GDP growth of 8.3% over 2007-16 was 6th highest in the world. Despite unprecedented growth levels public sector was unable to meet labor market demand with 500,000 new job seekers entering the market every year.
A private sector-driven growth model and attracting foreign investment are high on agenda. Worsening external environment since 2014 required the economy to move towards a different growth model. At end-2016, newly elected president Shavkat Mirziyoyev acknowledged that the economy needed new drivers of growth and some dismantling given that it was still closed and centrally planned 25 years after the collapse of the Soviet Union. The government’s five-year development strategy, adopted in February 2017, is the country’s official roadmap of liberal economic reforms aiming to increase private investment in the economy.
Uzbekistan implemented a series of reforms under its development strategy in 2017-18. Institutional progress was rapidly acknowledged by international observers. The World Bank named Uzbekistan as one of the top improvers globally and the regional leader in terms of its total number of reforms in its 2018 “Doing Business” report. Despite this progress, the authorities have much work to do to move away from a state controlled economic model and combat widespread corruption.
Uzbekistan has the potential to become the largest economy in Central Asia given its natural resources combined with the government’s commitment to promoting private sector-led growth. Moreover, Uzbekistan’s large FX reserves and low and affordable foreign debt provide a cushion against global market volatility. According to the IMF, the economy has the potential to grow by 5.0% in 2018-19, before accelerating slowly to 6.0% by 2022.
