BAKU, Azerbaijan, Oct. 7
By Klavdiya Romakayeva - Trend:
Despite the global economic downturn caused by the coronavirus pandemic, Uzbekistan will be one of only two countries in the Europe and Central Asia region to demonstrate economic growth, Trend reports referring to the World Bank.
In 1H2020, GDP growth was almost zero compared to growth of 5.8 percent in the 1H2019. Investment in fixed assets decreased by 12.8 percent for the same period. The unemployment rate rose sharply from 9.4 percent in the 1Q2020 to 15 percent in 2Q2020.
Increased gold production and growth in agriculture helped offset the sharp decline in industry and services. Despite a 19 percent decline in remittances in 1H2020, a 17 percent cumulative increase in social transfers and a 10 percent increase in the minimum wage since February 2020 helped to maintain private consumption.
Reduced remittances and widening foreign trade deficits pushed the current account deficit to 7.7 percent of GDP in 1H2020. Exports declined by 22.6 percent over the same period due to disruptions in the global supply chain and falling prices for major commodities (natural gas, metals). Imports fell by 15 percent after a sharp drop in the import of foreign-made machinery, equipment and semi-finished products into the country.
Annual inflation fell to 11.6 percent in August 2020, which allowed the Central Bank of Uzbekistan to cut the refinancing rate twice in 2020 - from 16 percent to 15 percent in April, and to 14 percent in September. Anti-crisis credit lines to enterprises helped increase lending to the economy as a whole by 18 percent from January through August 2020.
“The crisis caused by the pandemic has almost completely slowed down GDP growth in Uzbekistan in 2020 and increased the level of poverty for the first time in more than twenty years,” said World Bank Country Manager for Uzbekistan Marco Mantovanelli.
The lifting of 3Q2020, sustainable agricultural production and a partial recovery in remittances will lead to stronger economic activity in 2H2020 compared to its first half.
Provided that quarantine is not reintroduced across the country, GDP growth in Uzbekistan is projected at 4.8 percent to 5.0 percent in 2021.
Inflation will slow down in the medium term, but will remain high as a result of further price reforms. The current account deficit of the balance of payments is expected to be around 6 percent of GDP in 2020 due to the recovery in remittances and the reduction in the trade deficit.
The projected state budget deficit of 7.5 percent of GDP in 2020 will decrease in 2021-2022 with a gradual reduction in anti-crisis spending and an increase in revenues to the state budget.
---
Follow the author on Twitter: @romakayeva