BAKU, Azerbaijan, April 6. Economic growth in Uzbekistan is projected to slow down to 4 percent in 2022 as moderating private consumption curbs expansion in industry and services, recovering somewhat to 4.5 percent in 2023, Trend reports via Asian Development Outlook 2022.
According to the report, risks to growth stem from a tense external environment and the possible emergence of new COVID-19 variants. Economic sanctions on Russia are expected to trigger ruble depreciation and layoffs in construction and services, which are projected to cut the number of migrant workers by at least a quarter and sharply curtail remittances.
The government of Uzbekistan is preparing an action plan to cushion the resulting shock, prioritizing social protection, employment generation, and price stability. The aim is to ensure stability in the financial system and company operations, the timely implementation of investment projects, and the reliability of transport and logistics networks by diversifying export destinations.
The growth in services is forecast to slow down by two-thirds to 3 percent this year with stabilizing turnover in food services, accommodation, storage, and transportation, and then rise to 3.5 percent in 2023. Similarly, expansion in industry is expected to slow to 5 percent in 2022 after strong recovery in 2021 in textiles, food, and mining and quarrying, rising to 5.5 percent in 2023. Industry, by contrast, is expected to find support for growth in high domestic consumption of hydrocarbons and growing external need for metals and petrochemicals.
Expansion in agriculture is projected at 4 percent in both years as ample water for irrigating cotton and wheat boosts crop production. Growth in construction is forecast to plateau at 8 percent in 2022 and 2023, sustained by planned government programs for housing and local infrastructure and by manufacturing firm expansion.
On the demand side, growth in private consumption is expected to slow to 4.5 percent in 2022 with cooling post-pandemic demand and the anticipated drop in remittance inflow, which will curtail household income growth, and then edge up to 5 percent in 2023.
The fiscal deficit is forecast to narrow to equal 5 percent of GDP in 2022 and 4 percent in 2023. To sustain post-pandemic growth, the government adopted a national development strategy for 2022–2026 and a public investment program for 2022–2024 featuring plans to raise outlays for social protection, education, health care, and capital projects.
Expenditure is forecast to grow by 9 percent in 2022 to reach 35 percent of GDP before slower growth in outlays moderates expenditure growth to 8 percent in 2023 and, with higher nominal economic growth, reduce it to 33 percent of GDP.
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