IMF updates forecast for Uzbekistan's economic indicators

Finance Materials 14 July 2020 14:08 (UTC +04:00)
IMF updates forecast for Uzbekistan's economic indicators

BAKU, Azerbaijan, July 14

By Ilkin Seyfaddini - Trend:

The International Monetary Fund (IMF) forecasts a 4.2 percent growth in Uzbekistan's real GDP in 2021 in its new Regional Economic Outlook Update on the Middle East and Central Asia, Trend reports referring to the report on the Middle East and Central Asia of International Monetary Fund.

The forecast for oil and gas exporters of the Middle East and Central Asia (such as Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan) economic growth in 2020 has been confirmed at minus 1.1 percent.

Inflation in Uzbekistan is expected to decline from 8.1 percent to 6.6 percent in 2021.

In previous review, IMF forecasted a 7-percent growth in Uzbekistan's real GDP in 2021, while economic growth in 2020 has been confirmed at 1.8 percent. IMF expected that inflation in Uzbekistan will decline from 12.6 percent to 10.6 percent, in 2021.

"Since the end of April, most of the additional policy responses have focused on enlarging fiscal support packages, in particular through support to small and medium enterprises with time-bound tax deferrals, delayed tax deadlines, and utility holidays, with few changes to monetary policy. Utility support, temporary tax exemptions on essential goods, and tax holidays have also been widely deployed, as have credit lines to small and medium enterprises."

IMF noted that many of the transfers were one-offs or time bound and were put in place at the onset of the pandemic.

"Given the high levels of informality in some countries, mobile technologies have been deployed for cash-support delivery and the identification of beneficiaries. Nine central banks in the region (Armenia, Georgia, Jordan, Morocco, Saudi Arabia, Tajikistan, Tunisia, UAE, Uzbekistan) have injected more than $40 billion into their financial systems to support liquidity."

The report further said that countries should facilitate recovery by easing the reallocation of workers and resources, as the pandemic wanes, while resuming gradual fiscal adjustment and rebuilding policy buffers. IMF says that multilateral support can play a key role in helping countries surmount these shocks.

In its review, IMF noted, that during pandemic crisis, non-oil commodity producers prices, such as Uzbekistan, benefited from the increase in gold, and favorable weather and price liberalization boosted agricultural output in Uzbekistan.

"The IMF is actively supporting the region and has already approved nearly $17 billion to the Middle East and Central Asia Department countries since the beginning of 2020. Uzbekistan has accessed its concessional counterpart, the Rapid Credit Facility. These emergency financing instruments require no ex-post conditionality, and the Rapid Credit Facility is offered at zero interest", stressed the IMF.

As IMF says, the focus should shift toward rebuilding buffers, in particular by lowering public debt and increasing reserves, and promoting a resilient and equitable economy. Many countries in the region will come out of the crisis with little policy space, large public debts, and rising financing pressures, IMF says.

"The pandemic will likely accelerate global climate mitigation efforts and digitalization as some changes put in place during the crisis (for example, telecommuting and less travel) remain permanently. In this regard, redoubling diversification efforts will be essential to move the region away from its dependence on oil (both by exporters and through remittances) and toward building resilient economies that promote job creation."


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