BAKU, Azerbaijan, May 10. The economy of Uzbekistan is expected to grow at 4 percent in 2022, and 5 percent in 2023,Trend reports via EBRD’s Regional Economic Prospects report.
According to the bank, Uzbekistan enjoyed a broad-based economic recovery in 2021 resulting in real GDP growth of 7.4 percent.
"Reflecting the somewhat higher base, growth slowed to 5.8 percent year-on-year in the first quarter of 2022, led by very strong expansion in fixed investment (up by 26.3 percent) and a near tripling of exports.The latter was entirely due to the government’s’ decision to accelerate gold exports given the favorable price environment," said the report.
"Sanctions against Russia have put significant pressure on Uzbekistan’s soum, threatening a quick pass-through to prices. The Central Bank of Uzbekistan (CBU) responded to this pressure on March 17, 2022 by raising the policy rate by 300 basis points to 17 percent. The nominal Soum/USD exchange rate depreciated by a relatively modest 4.3 percent in April compared with early-January, while annual inflation inched up from 9.7 percent in February to 10.5 percent in March 2022," the bank said.
“Uzbekistan’s fundamentals (strong external and fiscal buffers, low government debt and a record of high growth relative to peers) bode well for the country’s ability to weather the storm,” the report said.
On the negative side, a protracted recession will reduce Russia’s demand for Uzbek workers. Remittances are likely to take a big hit, estimated at 2-3 percent of GDP, disproportionately affecting low-income households. A related weakening of consumer demand will ripple through the entire economy.
Uzbekistan’s exports to Russia are concentrated in the fresh fruit and vegetable category, with limited potential for diversion to other markets. And, given its double-landlocked position, Uzbekistan will be affected by higher costs of overland transport and logistics.