Uzbek economy shows resilience to COVID-19 shock, Fitch says

Business Materials 9 August 2021 17:30 (UTC +04:00)
Uzbek economy shows resilience to COVID-19 shock, Fitch says

BAKU, Azerbaijan, August 9

By Nargiz Sadikhova - Trend:

The Uzbek economy avoided a contraction and expanded by an estimated 1.6 percent in 2020, showing relative resilience to the COVID-19 shock due to robust external and public finances and a diversified commodity export base, Paul Gamble, a senior director in the Sovereigns team at Fitch Ratings, told Trend.

“High gold prices benefitted exports, public finances and international reserves. In addition, the country benefitted from reform progress in terms of macroeconomic policies, reduced state intervention in key sectors of the economy and financial and technical support from multilateral institutions,” he said.

In his words, the Uzbek authorities set up anti-crisis package of 2 percent of GDP in 2020, partly supported by the funding of international partners.

“Although a relatively short quarantine, slightly lower-than-planned execution of anti-crisis spending and postponement of some investment projects led to lower-than-budgeted deficit of 4.4 percent of GDP in 2020, the government will maintain an accommodative fiscal policy in 2021, targeting a 5.4 percent of GDP overall deficit and focusing on health, education and social spending, as well as continued investment,” Gamble added.

He noted that Uzbekistan’s vaccination campaign started in April and close to 4 percent is fully vaccinated at the end of June.

Policymakers challenge is to secure additional supply of vaccines and address vaccination hesitancy, Gamble said.

Gamble went on to add that risks to Uzbekistan’s growth outlook are related to the evolution of the coronavirus pandemic and immunization efforts in Uzbekistan and key trade partners, as Fitch has seen from the re-introduction of certain restrictions in late June due to the spread of the Delta Variant.

“We expect growth to rebound to 5 percent in 2021 and 5.5 percent in 2022 due to continued growth of agriculture and construction, supportive fiscal policy, gradual normalization of economic activity-supporting services and improving external demand. The government’s ambitious targets to reduce the share of the state in the economy, both through privatization and revamping key strategic companies, could support greater private-sector development, attract private and foreign investment and lead to productivity improvements,” he added.


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