The World Bank in Uzbekistan

Country Context

Uzbekistan has implemented bold reforms in recent years, liberalizing its economy and improving prospects for private sector development. Since 2017, with an average GDP growth of 5.3% annually, the country has become one of the world’s top reformers, outperforming many lower-middle-income economies.

Nevertheless, job creation has lagged with just 1.1% average growth over the last five years. However, the country needs to accelerate this as population growth averaged 2% over the same period, with a projected yearly net increase of 250,000 in the working-age population.

To achieve sustainable, job-rich economic growth, Uzbekistan needs to sustain its reforms focused on reducing state dominance in the economy, liberalizing key sectors, and improving the environment for trade, business, and investment. Building the right skills for the fast-growing economy is also an essential area for public investment.

In 2023, Uzbekistan adopted the National Development Strategy 2030, aiming to become an upper-middle-income country (UMIC) by the end of this decade. The country also plans to make progress in the following priority areas: empowering citizens; ensuring the population’s well-being through sustainable economic growth; protecting the environment and conserving natural resources; and developing public services with a focus on people’s needs. 

The World Bank Group remains committed to its collaboration with the government to assist Uzbekistan in realizing its key development objectives by 2030.

Strategy

In May 2022, the World Bank Group’s new Country Partnership Framework for Uzbekistan (CPF) was endorsed by the World Bank’s Board of Executive Directors. The document outlines the group’s financial and analytical support to the Government of Uzbekistan for the next five years in support of the National Development Strategy for 2022–26.

The CPF aims to expedite the country's move towards an inclusive and sustainable market economy through three overarching goals: (1) boosting private sector employment, (2) enhancing human capital, and (3) facilitating a transition to greener growth that improves livelihoods and resilience.

Additionally, the CPF seeks to help the Government of Uzbekistan in narrowing gender disparities and in fortifying citizen involvement and accountability within public services.

Since 2017, the World Bank's financial and analytical assistance to Uzbekistan has significantly increased, reinforcing the government's comprehensive market reform agenda. 

Today, the country is the World Bank's third-largest client in the Europe and Central Asia region and has the region’s largest International Development Association (IDA) allocation.

As of October 1, 2024, the World Bank’s country program in Uzbekistan consisted of 24 projects, with net commitments totaling over $4.7 billion. These projects are funded through highly concessional credits from IDA for over $3.4 billion (or over 70% of the entire financing that the World Bank has provided to the country) and loans from the International Bank for Reconstruction and Development (IBRD) for $1.3 billion.  

World Bank-funded projects, which are implemented by respective government agencies, are pivotal in driving critical macroeconomic reforms and modernizing a wide array of sectors. These projects target improvements in agriculture, water and land resource management, water supply as well as sanitation, energy, transport, health, education, and social protection systems. These projects also focus on enhancing both urban and rural infrastructure, investing in institutional capacity building, and developing national innovation, tax administration, statistical, and financial systems.

Moreover, the World Bank's engagement in Uzbekistan includes a comprehensive suite of technical assistance, advisory, and analytical services provided to the government. These services support the preparation and implementation of national strategies aimed at poverty reduction, health, education, and social protection, as well as sector-specific reforms in energy, aviation, tax administration, and banking, as well as assisting Uzbekistan with acceding to the World Trade Organization (WTO).

Economy

Recent Economic Developments

In Uzbekistan, real GDP growth increased to 6.5% in 2024 (from 6.3% in 2023). Real private consumption growth accelerated to 7.5% (compared to 7% in 2023). The 27.6% growth in real investment was driven by centralized investment and foreign direct investment (FDI), with the latter accounting for 30.5% of total investment.

The current account deficit narrowed from 7.6% of GDP in 2023 to 5.0% in 2024, aided by a 19.6% increase in net remittance inflows. Exports rose by 4.5%, with non-gold exports increasing by 16.5%, driven by the service, food, and chemical sectors, while exports of gold, textiles, and machinery moderately declined. 

Imports grew at an expected rate of 2.3% in 2024, driven by natural gas and a moderate reduction in the import of chemicals and transport equipment, the latter of which was a result of rising domestic production.

The Uzbek som depreciated by 3.7% against the US dollar in 2024 (compared to an 8.4% depreciation in 2023). International reserves reached $41.2 billion at the end of 2024, representing 12 months of imports, and a 19% increase over the year due to the surge in the price of gold. In 2024, the budget deficit reached 3.2%, compared to 5.5% in 2023.

The UMIC poverty rate declined from 13.4% in 2023 to 10.9% in 2024 ($6.85/day, 2017 PPP). High wage growth, increased employment, and growth in household agricultural and business income were the main drivers of this reduction.

Economic Outlook

Uzbekistan is projected to grow by 5.9% in 2025, driven by domestic demand from high real wages, remittance inflows, and investment. The improved trade balance, supported by growth in gold, services, and manufactured exports, along with fiscal consolidation, is expected to keep the current account deficit around 5% of GDP over the medium term.

The government is expected to meet its fiscal deficit target of 3% of GDP in 2025, as it continues its fiscal consolidation, including an additional round of energy subsidy reductions announced for mid-2025.

Headline inflation is projected to decline to 9% in 2025 and gradually approach the inflation target of 5% in 2027. The government is expected to adhere to its borrowing limits of $5.5 billion, with public debt decreasing to below 33% of GDP by 2027.

The downside risks to this outlook include a further deterioration in Russia’s economic performance, increased volatility in commodity prices, and rising food inflation compounding the 2025 energy tariff increases. Upside risks include higher global gold and copper prices, and faster productivity growth and FDI from ongoing structural reforms.