Slowing economic growth in Russia leading to increase of inflation in Uzbekistan?
Baku, Azerbaijan, Dec. 20
By Fikret Dolukhanov – Trend:
A slowdown in economic growth in Russia may lead to an increase in inflation in Uzbekistan, Trend reports on Dec. 20 referring to Uzbek media.
The statement was made by head of the Monetary Policy Department of the Central Bank of Uzbekistan Rustam Makhammadiyev.
“Our risk scenario involves the deterioration of both foreign and domestic economic conditions. This is mainly due to the slowdown in economic growth of the main trade partners of Uzbekistan, in particular, Russia. As a result, inflation in our country may get higher. For example, next year it may reach 17-18 percent,” Makhammadiyev said on the sidelines of a press conference in Tashkent.
According to him, inflation in 2019 in the baseline scenario is expected in the range of 13.5-15.5 percent, in 2020 – 10-12 percent, in 2021 – below 10 percent.
“Indeed, in terms of inflation, the factor of the situation dominates among the main foreign trade partners – Russia, Kazakhstan and China. If their economic situation worsens, economic growth will be lower, then, accordingly, the inflow of foreign currency, that is, remittances, and export earnings, will decrease,” Makhammadiyev explained.
As a result, the supply of currency in the domestic market will decrease, which will also affect inflation, as there is still a strong relationship between exchange rate dynamics and inflation in the country.
Makhammadiyev also added that if earlier inflation in Uzbekistan was mainly driven by the exchange rate, now it has become multifactorial.
At the same time, the expert noted that there were also positive factors that reduced inflation, including increased competition due to the opening of borders.
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