S&P Global Ratings has maintained Uzbekistan’s long-term foreign currency sovereign credit rating at 'BB-' with a stable outlook.
Uzbekistan's government is implementing reforms aimed at reducing the budget deficit, including adjustments to energy tariffs. Plans are in place to reduce energy subsidies and align sector costs by 2027. These changes, combined with high gold prices, are expected to lower the budget deficit from 5% of GDP to 3.5% over the next three years.
Fiscal reforms and remittance inflows will support economic growth, though the state’s debt burden is projected to increase at a slower rate. S&P estimates the current account deficit will remain high, averaging 6.8% between 2024 and 2027, compared to 7.7% in 2023.
Economic Growth and Investment
Uzbekistan's economic growth rate stood at 6.6% at the end of September 2024, consistent with the average of 6.8% over the past three years. While S&P expects growth to continue, it may slow to 5.5% annually starting in 2025.
The "Uzbekistan — 2030" strategy prioritizes investment in energy, transport, telecommunications, agriculture, and tourism. Green energy projects are a focal point, with the goal of increasing its share in energy consumption to 40%. Many initiatives are being executed through public-private partnerships.
Upcoming privatization efforts and Uzbekistan's potential accession to the World Trade Organization (WTO) may further enhance investment activity. Rising wages, remittances, and state incentives are also expected to bolster domestic consumption despite high energy tariffs and loan rates.
Labor Market and Trade Dynamics
Despite economic progress, GDP per capita remains relatively low at an estimated $2,900 for 2024. A young population offers growth potential, but job creation remains a challenge.
The Russian economy significantly impacts Uzbekistan’s labor market and trade. Russia accounts for 78% of remittance inflows this year, though contributions from Germany, Poland, and South Korea have increased. Trade with Russia rose by 26% over nine months, influenced by Western sanctions and a gas supply agreement with Gazprom. However, the risk of secondary sanctions on Uzbek companies trading with Russia remains a concern.
Earlier Daryo reported that S&P Global Ratings has confirmed Kazakhstan's long-term credit rating at BBB with a stable outlook. According to a report by Halyk Finance, the rating falls short of the targets outlined in the country’s program documents, primarily due to difficulties in budget forecasting.
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