Income growth in Uzbekistan slows down amid COVID-19

Finance Materials 20 September 2020 13:42 (UTC +04:00)

BAKU, Azerbaijan, Sept. 19

By Klavdiya Romakayeva - Trend:

The improvement in the epidemiological situation will harm the purchasing power of the population of Uzbekistan with a certain stagnation due to the consequences of the pandemic soon, Trend reports with reference to the Ministry of Economic Development and Poverty Reduction of Uzbekistan.

The Ministry of Economic Development and Poverty Reduction of Uzbekistan carried out a diagnosis of inflation factors for January through August 2020.

The published report notes that due to the economic consequences of the pandemic, there was a temporary slowdown in income growth. The most severe consequences were felt by several private sector enterprises due to the suspension of their activities, which in turn led to a direct reduction in the number of employees and their pay.

At the end of the first half of 2020, the growth of the total income of the population amounted to 1.5 percent against 7.2 percent in the same period of 2019.

This, in turn, affects the nature of household spending and creates a more cautious approach to purchases from the population.

Under the official version, the long-term preservation of quarantine measures will affect the increased demand of the population for food and non-food essential goods, which will exert some pressure on prices through the channel of inflationary expectations.

It follows from the fact that a modest increase in household incomes leads to a weak increase in consumer spending, and will exert high pressure on essential goods, as was observed during the period of the introduction of quarantine measures.

Analysts of the Ministry of Economic Development do not exclude the possibility that the improvement of the epidemiological situation will hurt the nature of purchases of the population with a certain lag due to the presence of the consequences of the pandemic shortly, especially at the current rate of growth in the population's income.

According to the Ministry, the inflation in Uzbekistan is quite likely formed as a result of imperfect market relations and weak structural regulation of inflationary processes. Thus, there is an urgent need for a deeper study of non-monetary factors of inflation.

The influence of monetary factors on the inflation rate is short-term, but it can be argued that it is non-monetary factors that play a decisive role in the development of inflationary processes.

"To consolidate inflation within the expected forecast corridor of 11 percent - 12.5 percent ​​by the end of 2020, it is necessary to continue creating the foundations for price stability in the medium and long term through the formation of market relations. In particular, the liberalization of the domestic market, the development of a competitive environment, the reform of agriculture, and the production of consumer goods. This is, first of all, overcoming the boundaries of low economic diversification, low competitiveness, as well as a high degree of inflation adaptability to changes in the external sector," the Ministry reports.


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