The World Bank forecasts Uzbekistan's economy to grow by 6% in 2023 and 5.3% in 2024, with a slight decrease from the previous report. The country's GDP is expected to maintain a 5.5% growth in 2025, according to the World Bank's latest report on Europe and Central Asia.
In 2023, Uzbekistan's real GDP increased by 6%, attributed to investments, private consumption, and exports. The growth in investments was driven by increased lending to state-owned enterprises and private sector companies.
Consumer price inflation reached its lowest level in seven years in December 2023, dropping to 8.8%. This was a result of stringent monetary policies, reduced value-added tax rates, and lower prices of food and energy on international markets.
The Uzbek som depreciated by 9% against the US dollar, partly due to the devaluation of the Russian ruble, the country's key trading partner. The current account deficit worsened in 2023 due to accelerated import growth and reduced remittances from labor migrants.
Gas exports from Uzbekistan halved due to increased domestic consumption, leading the country to start importing gas from Russia for the first time in 2023.
The budget deficit increased to 5.8% of GDP in 2023, driven by extraordinary spending on energy infrastructure, higher wage and social benefit payments, energy subsidies, and subsidized lending to state-owned enterprises.
Gold and foreign exchange reserves remained sufficient, covering eight months of import expenses by December. Real wage growth contributed to poverty reduction, with the poverty rate decreasing from 5% in 2022 to 4.5% in 2023.
Unemployment fell to 8.1% in 2023 from 8.9% in 2022, while real wages increased by 7.8%, driven by demand and a shortage of skilled workers in the labor market.
Looking ahead to 2024, the World Bank projects Uzbekistan's GDP growth to reach 5.3%, supported by structural reforms, enterprise restructuring, privatization of state assets, and significant investments in the energy sector.
Inflation is expected to rise in 2024 due to internal energy price hikes, offset by the Central Bank of Uzbekistan's tight monetary policy transitioning to full-fledged inflation targeting.
Imports are expected to grow moderately, with a stable pace to modernize various economic sectors and meet rising consumer demand. Remittances are projected to decrease, leading to a slight increase in the current account deficit.
The government aims to reduce poverty to 4.3% in 2024, while budget deficits are forecasted to decline to 4.2% of GDP by 2024 and 3% by 2026 through subsidy cancellations and efficient revenue growth.
External risks include economic slowdowns in Russia and China, while internal risks involve financial obligations of state enterprises and public-private partnership projects.
Uzbekistan is among the top five fastest-growing economies in Europe and Central Asia, alongside Tajikistan, Armenia, Georgia, and Kyrgyzstan. Economic growth in the region is expected to slow down in 2024 due to global economic weakening, strict monetary policies, China's growth deceleration, and declining commodity prices.
