Since the mid-2000s, Uzbekistan has enjoyed robust GDP growth, thanks to favorable trade terms for its key export commodities like copper, gold, natural gas, cotton, the government’s macro-economic management, and limited exposure to international financial markets that protected it from the economic downturn. Still, the future is not without challenges.
Overall growth for Uzbekistan is projected to continue at around 7 to 8 percent annually during 2011-14, supported by net exports and a large capital investment program. World prices for Uzbekistan’s principal exports are projected to remain favorable at least through the first half of the 2012-15 fiscal year (FY) Country Partnership Strategy (CPS) period.
The impact of recent increases in global food and energy prices is expected to be limited given Uzbekistan’s policy of self sufficiency in both food grains and energy. Given the government’s plans to finance up to two-thirds of their investment program from external sources, including loans, external debt is expected to increase gradually.
The country has to contend with a combination of risk factors going forward, including deteriorating security conditions due to the situation in Afghanistan, and increasing tensions between with neighbors over regional issues—especially the management and use of trans-boundary energy and water resources. Domestically, Uzbekistan has to work to minimize its economy’s vulnerability to possible external shocks affecting commodity prices and the anticipated inflow of foreign direct investment (FDI) and external loans to finance the large public investment program.
Uzbekistan, with the goal of becoming an industrialized, high middle-income country by around 2050, is continuing to transition to a more market-oriented economy to ensure equitable distribution of growth between regions and to maintain infrastructure and social services. The country’s policy goals and priorities are: to increase the efficiency of infrastructure, especially of energy, transport, and irrigation; to enhance the competitiveness of specific industries, such as agro-processing, petrochemicals, and textiles; to diversify the economy and thereby reduce its reliance on commodity exports; and to improve access to and the quality and outcomes of education, health and other social services.