The economic dynamics of Uzbekistan and Kazakhstan exhibit patterns, revealing both growth potentials and structural challenges. This analysis posted on Caravan shows various facets of economies, considering growth rates, debt dynamics, economic structures, labor migration, poverty alleviation efforts, population demographics, purchasing power parity, and future prospects.
Economic Growth and Challenges
Uzbekistan's projected economic growth of 5.5% in 2023, outpacing Kazakhstan's 4.6%, demands nuanced consideration. Uzbekistan's remarkable growth is partly attributed to a low base effect, primarily driven by the public sector. Meanwhile, Kazakhstan's more substantial, service-oriented economy faces challenges in maintaining high growth rates amid evolution.
Debt Dynamics
Uzbekistan's public debt is projected to reach 36.6% of GDP in 2024, a moderate level despite constraints on external borrowing. In contrast, Kazakhstan's combined national and guaranteed state debt is 14% of GDP, eliciting criticism for budget management. Balancing debt levels is crucial for allocating funds to economic development.
Economic Structure
A closer examination of economic structures reveals nuances. Uzbekistan heavily relies on the public sector, contributing 40.2% to GDP, with agriculture at 21.2% and services at 29.3%. In Kazakhstan, the service sector dominates at 55.8%, driven by oil and gas services, with industry at 27%, and agriculture at 5.3%.
Labor Migration and Remittances
Uzbekistan's economic model leans on labor migration, with around 2 mn citizens working abroad. Remittances in 2022 amounted to $16.9bn, surpassing earnings from exports of goods and services. This reliance on external income sources underscores both economic strengths and vulnerabilities.
Poverty and Privatization Dilemma
The hesitancy of Uzbekistan to pursue large-scale privatization is tied to poverty concerns. With over 1.3mn poor families and a 14.1% poverty rate, the government faces the challenge of balancing economic development with social stability. The dominance of the public sector provides a safety net but may hinder rapid economic growth.
Population and Educational Ambitions
Uzbekistan's demographic advantage with a population of over 36 mn, expected to exceed 41 mn by 2030, aligns with ambitious educational goals. The commitment to having half the population with higher education by 2030 suggests a strategic focus on enhancing the quality of the labor force.
Purchasing Power Parity (PPP)
Purchasing power parity (PPP) adjustments offer a nuanced perspective. In 2022, Uzbekistan's economy, adjusted for PPP, stood at $340bn, while Kazakhstan's was $605bn. This metric moderates the apparent economic size difference and provides insights into the real value of currencies.
Future Prospects
While Uzbekistan may not surpass Kazakhstan in the short term, its larger market size and entrepreneurial culture signal significant growth potential. The impending Aydarkul nuclear power plant's construction could act as a catalyst for the anticipated "Uzbek economic miracle" in the 2030s.
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