EBRD predicts a slower growth of the Uzbek economy

In 2018-2019, economic growth in the Central Asia will slow down, which reflects on the need for fiscal consolidation and retardation of growth in the extractive sector, analysts at the European Bank for Reconstruction and Development (EBRD) said.

In its latest report “Regional Economic Prospects”, the EBRD points out that the growth rate in the region will decline from 4,8% in 2017 to 4,6% in 2018. It is expected that in 2019, the growth rate will drop even more – as low as 4,2% in the context of declined incomes in the extractive sector and rise of inflation, which limits the growth of real incomes and personal consumption.

However, the report notes that the recovery of remittances continues in the Kyrgyz Republic, Tajikistan and Uzbekistan, although they remain below the pre-crisis levels of 2013-2014.

“In the current year, in Uzbekistan, the economic growth has somewhat retarded, reflecting a shift of the trade balance to a deficit and slower growth of household consumption due to rising prices. At the same time, promoting reforms in Uzbekistan creates the foundation for steady growth in the coming years, price liberalization and exchange rate along with a reduction in subsidies led to the adjustment of relative prices and double-digit inflation,” the bank representatives noted.

According to EBRD experts, the growth rate in the country may slightly decrease from 5,3% in 2017 to 5,0% in 2018 and to 4,5% in 2019 as a result of slowdown in the growth of real incomes of the population due to inflation and further increase of trade deficit.

It should be noted that in mid-October, Uzbekistan and the EBRD, on the ground of the Uzbek-French business forum, signed agreements on projects totaling up about €500 million.

These projects are aimed at creating favorable economic conditions in the republic and improving the living conditions of people in remote areas. In particular, agreements were reached on the modernization of heat and water supply in Namangan, Khorezm regions and Tashkent for a total amount of €260 million, on updating the water disposal system in Kashkadarya and Khorezm regions by more than €100 million.

Also, an agreement was also reached on cooperation in the field of energy between the EBRD, “Uzbekenergo” and the State Committee on Investments under the project for the construction of the Muruntau substation with a total value of more than €70 million.

In early October, the Board of Directors of the EBRD confirmed a new strategy for Uzbekistan, which defines the priorities of the bank in the country for the next five years.

In 1992-2010, the EBRD invested €894 million into 54 projects in Uzbekistan. By the end of 2017, the bank signed the first six new operations in the country, totaling more than €153 million.