Uzbekistan's economy is expected to maintain stability, a dynamic pace of development by the end of the year: CERR Expert

“The economy of Uzbekistan in the 1st half of the year maintained high growth dynamics and remained resistant to changes in the unstable external environment,” said Ruslan Abaturov, chief researcher of the Center for Economic Research and Reforms (CERR).

According to the Statistics Agency, the gross domestic product (GDP) of Uzbekistan increased by 5.6 percent in the first six months of the year, which is higher than the figure recorded during the same period in 2022.

Despite the persistence of geopolitical instability, the economic situation in neighbouring countries in January-June of this year was generally favourable, experts said.

In Kazakhstan, the economy grew by 5 percent, in Kyrgyzstan by 3.9 percent. In China, GDP growth was 5.5 percent.

Inflation in Uzbekistan continues to slow down and at the end of six months, the figures showed the lowest rates recorded in the last five years.

In January-June, prices increased by 3.5 percent.

During the same period in 2022, prices had spiked by 6.5 percent.

In annual terms, inflation slowed to 9 percent (in June 2022 – 12.2 percent).

Food inflation slowed from 8.9 percent in January-June 2022 to 4.1 percent over the same period this year.

Similarly, the growth of prices for non-food products slowed from 5.8 percent to 3.1 percent, and for paid services from 3.3 percent to 2.9 percent.

Investments in fixed assets for six months increased by 7.9 percent (in January-June 2022 – 6.6 percent).

The main inflow came from non-centralized investments, the growth rate of which was 8.7 percent.

Of these, investments at the expense of enterprises increased by 15.8 percent, funds of the population – 8.7 percent, loans from commercial banks and other borrowed funds – 36.5 percent.

In addition, there is a double-digit dynamic in attracting foreign direct investment at the level of 21 percent.

Investments from centralized sources in the first half of the year increased by 2.4 percent, in particular, at the expense of budget funds by 3.6 percent.

Foreign investments and loans guaranteed by the government increased by 6.9 percent.

In general, the share of centralized investments in the investment structure decreased from 13 percent in January-June 2022 to 12.3 percent, and the share of non-centralized ones increased from 87 percent to 87.7 percent, respectively.

It should be noted that the share of investments directed in the manufacturing industry increased to 30.2 percent (28.9 percent in the 1st half of 2022), the mining industry to 8 percent (6.1 percent).

Industrial production in the first 6 months grew at a faster pace compared to the same period in 2022 – 5.6 percent versus 5.1 percent, respectively.

The main factors of economic growth are due to the timely adoption of urgent measures to support entrepreneurs, as a result of which the growth of the manufacturing industry amounted to 6.3 percent (5.9 percent for the first half of 2022), the mining industry by 0.2 percent (-0.5 percent).

Also, power supply grew the most dynamically among the industrial sectors by 9.9 percent, which, however, is lower than in January-June 2022 (an increase of 14.7 percent).

In addition, in the 1st half of this year, the sectors that were declining last year also grew.

In particular, the mining industry experienced a slight increase of 0.2 percent, the water supply, sewerage, waste collection and disposal sector grew by 3.6 percent, against a decrease of 11.6 percent in the first 6 months of 2022.

The dynamics in the construction sector slowed down slightly from 5.1 percent in January-June 2022 to 4.8 percent for the same period this year.

In agriculture, in particular in crop production and animal husbandry, there is an acceleration in the growth rate of output to 3.8 percent (in January-June 2022 – 2.7 percent). At the same time, the growth rates of forestry and fisheries have slowed down somewhat.

The volume of market services rendered in the first 6 months of 2023 increased by 12.3 percent (for the same period in 2022 – 14.5 percent).

In terms of sectors, communication and information services grew at double-digit rates by 22.9 percent, financial services by 22.7 percent, education services by 19.5 percent, accommodation and food by 10.4 percent.

In the transport sector, the volume of services increased by 8.6 percent. The growth rates of cargo turnover and passenger turnover have slowed down.

There is a slowdown in the growth rate of retail turnover from 9.9 percent in January-June 2022 to 6.9 percent for the same period in 2023.

Foreign trade turnover in the first half of the year increased by 19.4 percent to $29.2 billion.

Exports increased by 23 percent to $12.1 billion, imports by 17 percent to $17 billion.

The export growth is due to an increase in the supply of machinery and transport equipment to foreign markets by almost 60 percent, gold by 47 percent, services by 41 percent, food by 33 percent, various finished products by 25 percent.

At the same time, exports of non-food raw materials decreased by 26 percent, fuel and energy resources by 20 percent.

In imports, an increase in supplies to Uzbekistan is noted for fuel and energy products by 73 percent, machinery and transport equipment by 30 percent, chemical products by 10 percent.

“In general, the main trends of the 1st half of the year were strengthening macro stability and reducing the impact of negative factors on the economy, supporting positive growth dynamics of economic sectors, and strengthening investment activity. Uzbekistan's economy is expected to maintain stability and a dynamic pace of development by the end of the year,” an expert said.