Uzbekistan's economic outlook for 2023 and 2024 is positive, with increased state investments and strong growth in various sectors driving the country's GDP.
The following factors contribute to this outlook:
Robust State Investment: Uzbekistan is expected to witness a significant boost in gross fixed capital formation (GFCF), contributing approximately 4.0 percentage points (pp) to the country's GDP in both 2023 and 2024. During H1 2023, the nation invested heavily in infrastructure, machinery, and equipment upgrades, resulting in a 7.9% year-on-year growth. The government is planning to implement 86 investment projects worth $983.6mn in special economic zones (SEZs) in an effort to attract new investments.
International Collaborations: Uzbekistan is actively engaging in partnerships with international financial institutions (IFIs) to bolster its economic development. The nation has partnered with the Asian Development Bank (ADB) to enhance road transport connectivity and invest in the education system. The government is also focusing on water infrastructure projects and water-saving technologies, with $139.2mn and $300mn respectively from IFIs allocated for these purposes.
Private Consumption: While private consumption remains resilient in H1 2023, it is expected to weaken in H2 2023 due to a decrease in remittances. Remittance flows have declined, partly due to the depreciation of the Russian ruble. Uzbekistan received $5.2bn in remittances in H1 2023, marking a 21.5% decrease from the previous year. This is compounded by the strengthening of the Uzbek som by 40.0% against the ruble. A significant portion of Uzbekistan's remittances, about 80.0%, comes from Russia.
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Net Exports: Uzbekistan's trade sector remains active, with both exports and imports on the rise. Exports increased by 23.5% in H1 2023, with machinery and transport equipment showing significant growth at 43.8%. Gold remains a primary export product, with the potential for elevated gold prices due to geopolitical tensions in the Middle East. Russia continues to be a significant export destination, sustaining demand for Uzbek exports. Imports also grew by 21.2%, primarily driven by machinery and equipment, indicating increased production capabilities in the industrial sector.
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Growth Outlook For 2023-2024
Real GDP Growth: Uzbekistan's GDP is forecasted to grow by 5.3% in 2023 and 5.6% in 2024, driven by state investments, industrial production, and other positive economic indicators.
Private Consumption: Private consumption is expected to contribute 2.7 percentage points (pp) to GDP in 2023, increasing to 3.0 pp in 2024. Decelerating consumer price growth and social assistance in 2024 will support private consumption.
Government Consumption: Government spending will remain stable in 2024 as the government will continue to provide social benefits, contributing 0.4 pp to GDP in both 2023 and 2024.
Fixed Capital Formation: Gross fixed capital formation (GFCF) is expected to contribute 4.0 pp to headline GDP in 2023 and 2024, up from a prior forecast of 3.9 pp.
Net Exports: Net exports are projected to subtract 1.7 pp from headline GDP growth in 2023 and 2024, indicating challenges in maintaining a balanced trade profile despite strong export and import performance.
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