In its flagship annual economic publication, Asian Development Outlook (ADO) 2020, ADB projects gross domestic product (GDP) growth for Uzbekistan to be 4.7% in 2020, slower than last year’s 5.6% growth.

ADB forecasts GDP growth to bounce back to 5.8% in 2021, with reforms boosting growth in agriculture, industry, and services.

“While we don’t yet know the full scale of the pandemic’s impact, the Government of Uzbekistan is taking significant and appropriate measures to sustain its reform agenda and reduce the time required for the economy to recover from the slowdown,” said ADB Country Director for Uzbekistan Cindy Malvicini.

Investments are expected to remain a major growth driver for 2020 and 2021, reflecting further improvement of government-led investments in developing urban infrastructure and manufacturing facilities. Private consumption is expected to benefit from periodic wage growth and slowing inflation despite the adverse effect on remittances of currency depreciation in the Russian Federation.

Inflation is projected to decelerate to 13% in 2020 and further to 10% in 2021 as the central bank gradually shifts toward inflation targeting, while fiscal tightening with policy-guided lending reforms are expected to halve credit growth. However, planned price hikes for electricity and natural gas, as well as further deregulation of prices in agriculture, will maintain inflationary pressures.

Exports of natural gas and copper are expected to decline in 2020, offset by higher gold exports. In 2021, exports should expand with structural reforms in agriculture, improved infrastructure for services and industry, and higher external demand for natural gas. This trend is expected to narrow the current account deficit.

The report highlights the need to continue efforts to contain inflation as Uzbekistan undergoes comprehensive reforms to transform into a market economy. ADB suggests further consolidating the credit market and smoothing price adjustments for electricity and other utilities with targeted offsets in order to mitigate their impact on the poor.

In order to further curb inflation, the report encourages the government to continue to promote private sector involvement in the transportation, education, and health care industries, and streamline customs clearance procedures to avoid price escalation for imports./.

Khac Kien