World Bank explains why Uzbekistan’s GDP growth to be highest in Central Asia

World Bank explains why Uzbekistan’s GDP growth to be highest in Central Asia

BAKU, Azerbaijan, Jan. 14

By Fakhri Vakilov - Trend:

World Bank’s recent Global Economic Prospects report not only focuses on economic prospects but it is also based on the analysis of the actual trends taking place in recent years across the world, including in Uzbekistan, World Bank’s representative told Trend in an interview.

Recently Trend reported that in Global Economic Prospects report it was stated that WB predicted Uzbekistan's GDP growth of 5.7 percent for 2020 and 6 percent for 2021-2022, which is the highest indicator for Central Asian.

“The country’s GDP grew by 5.1 percent in 2018 and 5.5 percent in 2019. For comparison, in Russia, GDP grew by 2.3 percent in 2018 and around 1 percent in 2019. In Kazakhstan, GDP grew by 4.1 percent in 2018 and about the same rate in 2019,” the official stated.

Unlike economies of Russia and many other states, whose economies are driven equally by consumption and investment (that grow at slow rates), Uzbekistan’s economic growth is driven mostly by investment that expanding by high rate. Total investment in fixed capital in the country grew in real terms by 18 percent in 2018 and by 23 percent in 2019. Private consumption grew by 4 percent in 2018 and an estimated 5 percent in 2019.

“This is much higher than in most other states in the Europe and Central Asia region. For example, in Russia, investment grew by just 0.8 percent in 2018, and consumption grew by 1.8 percent in 2018. In 2019, both consumption and investment in this country are expected to grow by about 1 percent each,” the representative stated.

In Kazakhstan, investment grew by 2.4 percent in 2018 and 4.3 percent in 2019, and consumption grew by 2.1 percent in 2018 and by 2.7 percent in 2019.

High investment growth in Uzbekistan has brought the share of investment to GDP in Uzbekistan to 26 percent of GDP in 2018 and an estimated 31 percent of GDP in 2019. For example, in Russia, the share of investment in GDP was 22.7 percent in 2018 and 23 percent in 2019.

“We forecast that inflation will go down in Uzbekistan in 2020-21, which is good for consumption and investment growth. It is expected the country will continue its market-oriented reforms that improve the business climate and stimulating private investment growth, including foreign direct investment,” the representative stressed.

The official noted that Uzbekistan will expand the non-commodity production and exports, e.g. in textile, processed food, chemical industry (e.g. fertilizers, plastics) and machinery products (e.g. cars, trucks, buses, home appliances), as well as agriculture (fresh fruits and vegetables) and services (e.g. tourism, transport, ICT, etc.). As a result, GDP growth is set to accelerate to 5.7 percent in 2020.

The representative added that although international commodity prices will be subdued, Uzbekistan gold export (about 1/4 of total export in 2018) is expected to stay high and expand as world price on gold is projected to stay high in 2020-21.

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