A new approach by the Uzbekistan authorities has allowed the EBRD to re-engage in the country, open a new Resident Office in Tashkent and prepare a new Country Strategy adopted by the Board of Directors in September 2018.
The document identifies the following operational and strategic priorities for the EBRD’s work in Uzbekistan:
- Enhancement of competitiveness by strengthening the role of the private sector’s role in the economy
- Promotion of green energy and resource solutions across sectors
- Support increased regional and international cooperation and integration.
The Bank’s new phase of engagement with the country was prompted by a major reform programme launched by the authorities in February 2017 moving towards a more open, integrated market economic model, improving international relations, strengthening the rule of law and judicial independence and achieving the liberalisation of the foreign exchange rate. Reducing the state’s presence in the economy, improving the business environment and facilitation of foreign direct investments are among the top priorities of the Uzbek authorities.
The new EBRD strategy for Uzbekistan recognises the need to strengthen the country’s democratic institutions, expand the role of civil society, provide greater freedom to mass media and promote women’s entrepreneurship. The Bank will also continue monitoring progress on the eradication of forced and child labour in sectors such as the cotton growing industry.
The EBRD's latest Uzbekistan strategy was adopted on 19 September 2018.
Current EBRD forecast for Uzbekistan's Real GDP Growth in 2018: 5.0%
Current EBRD forecast for Uzbekistan's Real GDP Growth in 2019: 4.5%
Economic growth slightly decelerated in 2018 following a decline to 5.3 per cent growth in 2017 from the official rate of 7.8 per cent in 2016. GDP growth was 5.2 per cent year-on-year in the first three quarters of 2018. The slowdown was caused by a deterioration of the trade balance, with exports declining by 0.3 per cent year-on-year in January-September 2018 and imports expanding by 33.3 per cent year-on-year in the same period. In addition, growth of domestic consumption eased in response to price increases. While Uzbekistan’s reform push lays the ground for solid growth in the years to come, the price and exchange rate liberalisation and the reduction of subsidies has led to the adjustment of relative prices and double-digit inflation (15.7 per cent year-on-year in August 2018) The liberalisation of foreign trade led to higher exports of meat and some other goods, and price increases in response to the higher overall demand.
The high inflation and some exchange rate weakening prompted the central bank to tighten monetary policy in September 2018 and hike the policy rate hike from 14.0 per cent, were it stood since June 2017, to 16.0 per cent. The current account was in deficit by around US$ 1 billion in the first half of 2018, although the growing trade balance deficit was partially offset by remittances inflows. The exchange rate started appreciating at the beginning of 2018 until September 2018, when mild depreciation pressures set in. Overall, the som strengthened by 2 per cent in the first nine months of 2018. GDP growth may slow somewhat to 5.0 per cent in 2018 as a whole and to 4.5 per cent next year as a consequence of a deceleration in real income growth due to inflation and a further widening of the trade deficit.