World Development Indicators (WDI), the World Bank’s premier compilation of cross-country comparable data on development, show that gross national income has declined over the past four years.
According to a comment provided to Kun.uz by the World Bank’s Office, this does not imply that the gross national income per capita of Uzbekistan calculated using the “Atlas” method has declined from $2,660 to $1,800 between 2016 and 2019.
“The method “Atlas” is sometimes used to estimate the size of the economy in US dollars instead of the national currency. The calculation of GNI is first made in the national currency of each country, and only then, with the application of the “Atlas” method, converted into US dollars. These calculations use the average exchange rate over the past three years.
The official economic statistics of Uzbekistan are primarily expressed in soums. It is then converted into dollars at the official exchange rate established by the government. However, the government announced a change in the exchange-rate regime in September 2017, which led to the official devaluation of the Uzbek soum against the United States dollar by approximately 50%.
As a result, national income, expressed in US dollars and other economic and statistical data, appeared to have declined significantly since 2017. Due to the change in the exchange rate regime, comparing income before 2017 and subsequent figures in dollars may lead to incorrect conclusions. Thus, a decrease in income can be referred to the change in the exchange rate, hence the official statistics expressed in Uzbek soums, when converted into US dollars, are reduced due to the depreciation,” the World Bank says.
“Until the exchange rates were unified in 2017, the population of Uzbekistan could not exchange their soums for foreign currency at the official exchange rate. These policies have led to the emergence of a large-scale alternative foreign exchange market. At the time, the devaluation that brought the official US dollar exchange rate into line with the alternative market value did not have much impact on the purchasing power of citizens. In such cases, when the exchange rate changes significantly as a result of devaluation, it is advisable to estimate the increase or decrease of income in Uzbek soums (not in foreign currency), and compare the goods that citizens can buy with the money they earn,” the comment says.
According to official Uzbek reports, calculated in soums, per capita income has been rising steadily since 2016, even when taking into account inflation. Other sources of information also suggest such a conclusion. For example, the World Bank study “Listening to the Citizens of Uzbekistan”, which has been conducted since 2018, collected data on the income of more than 1,500 families, covering both rural and urban areas. According to the data, average per capita income rose by about 5,2% in the last quarter of 2019 compared to the same period of the previous year, and at the beginning of 2020, before the coronavirus pandemic, the growth rate was even higher.