In 2023, Uzbekistan recorded a 6% growth in GDP, supported by a comprehensive expansion and targeted fiscal stimulus. In response to an increase in the fiscal deficit during the year, the government plans to consolidate fiscal spending in 2024, the World Bank reports. The GDP growth forecast for 2024 is 5.3%, influenced by fiscal consolidation and moderated export growth to key trading partners. Inflation is projected to rise due to increased domestic energy prices, with an expected stabilization of around 8% in the medium term.
The year witnessed an increase in real wages which contributed to a reduction in the poverty rate from 5.0% in 2022 to 4.5% in 2023, measured at the lower-middle-income poverty line of $3.65/day (2017 PPP). The disparity in wage growth between skilled and less skilled workers led to a widening income inequality.
Uzbekistan continued to implement significant economic reforms aimed at improving the business environment and encouraging private-sector investment. Key initiatives in 2023 included the establishment of an independent energy regulator, restructuring of state-owned enterprises, privatization of significant assets, and enhancement of social protection and environmental policies.
The integration of a growing youthful population into the workforce remains a strategic challenge. The government's reform agenda focuses on reducing state dominance in the economy, enhancing property rights, liberalizing strategic sectors, and lowering trade barriers to bolster employment and productivity.
The drivers of the 6% GDP growth in 2023 included increased investment, consumer spending, and exports, with a notable acceleration in real credit growth. Consumer price inflation declined to 8.8% y/y in December 2023, reaching its lowest level in seven years due to strict monetary policies and reduced global food and energy prices.
The fiscal deficit increased to 5.8% of GDP in 2023 from 4.1% in 2022, driven by higher emergency and social spending. Foreign reserves stood strong at $34.6 bn, sufficient to cover over eight months of imports. The depreciation of the Uzbek sum and decreased gas exports necessitated gas imports from Russia for the first time.
Ongoing structural reforms, particularly in the privatization of state-owned enterprises and investment in the energy sector, are crucial for maintaining economic stability and growth.
Follow Daryo's official Instagram and Twitter pages to keep current on world news.
Comments (0)