BAKU, Azerbaijan, November 17. Uzbekistan’s economic growth has remained strong in 2022, despite global and regional headwinds, but inflation has picked up and exceptional uncertainty lies ahead,Trend reports via International Monetary Fund (IMF).
According to IMF, prudent policies to bring down inflation and ensure fiscal sustainability, and further structural reforms will reinforce macroeconomic stability and enhance growth and resilience.
An International Monetary Fund staff team, led by the head of the mission Ron van Rooden, met with the authorities of Uzbekistan during November 7–15, 2022 to discuss economic developments and prospects, as well as policy priorities.
At the end of the mission, Mr. van Rooden issued the statement. According to him, Uzbekistan’s economy has continued to perform strongly this year,despite new headwinds posed by Russia-Ukraine conflict, global price pressures, and a tightening of global financial market conditions. Contrary to expectations earlier this year, money transfers, including remittances, more than doubled, and together with continued fiscal support and resilient trade this has supported economic activity and growth in Uzbekistan. As a result, Uzbekistan’s economy is projected to grow by almost 6 percent in 2022.
"Inflation has increased and become more broad-based, reflecting rising prices globally, especially of food and energy. Thanks to the Central Bank of Uzbekistan’s (CBU) decisive and timely actions, inflation is expected to remain contained at about 12 percent by end-2022," van Rooden said.
Additional headwinds lie ahead, and uncertainty is large. Global economic growth is projected to slow in 2023 and, despite this slowdown, inflation could prove more persistent. As a result, and while domestic demand is expected to remain relatively buoyant, economic growth in Uzbekistan is projected to slow somewhat in 2023, to just under 5 percent. Inflation is expected to remain elevated. Downside risks to Uzbekistan’s economic outlook include risks stemming from a possible further escalation of the conflict in Ukraine, while global growth could slow further, and financial conditions could deteriorate, he noted.
"Navigating the current uncertain environment will require increased vigilance. Inflation remains the most immediate threat to current and future prosperity by squeezing real incomes and undermining macroeconomic stability. Failing to tackle inflation risks that it becomes entrenched, increasing the eventual cost of bringing inflation under control," he said.
"Despite the headwinds, the Uzbek authorities are continuing with market-oriented structural reforms, to enable a shift from public to stronger private sector-led growth. Building on the impressive progress already made in recent years, this will entail reducing the still large role of the state in the economy and further improving the business environment. Small and medium-sized enterprises-which will need to be the main source of new jobs for the rapidly growing labor force-will especially need to be able to grow and flourish," van Rooden reported.
As the authorities continue with sound macroeconomic policies and reforms, growth is expected to remain strong in the years ahead. This would allow the government to reach its goal of Uzbekistan becoming an upper middle-income country by 2030, he stated.