Central Bank predicts annual inflation below 10% in 2023

A persistently high external inflationary background is superimposed on the continuing growth of household incomes. Therefore, the CB Board at a meeting on January 26 decided to leave the refinancing rate at 15%.

During 2022, there was an increase in the price of a wide range of goods. According to its results, inflation amounted to 12.3%, and the trend towards a slowdown in price growth for the first time since 2019 was replaced by growth.

Core inflation rose steadily in the second half of the year, reaching 13.8% at the end of the year. Inflationary expectations have also been on the rise in recent months – combined with the producer price index, this indicates the possibility of expanding inflationary risks.

At the same time, the weakening of global inflationary processes is expected, as indicated by the decline in stock prices for food. Here, both the adaptation of the world economy to changes and the tightening of the policy of central banks played a role.

Despite expectations of serious external economic threats, Uzbekistan has maintained relatively high rates of economic growth. This was facilitated by an increase in foreign exchange inflows from exports and cross-border money transfers.

Rising remittances, as well as wages, stimulated a rise in overall consumption, in particular in the markets for durable goods. Namely, it became the main driver of GDP growth by 5.7%.

The regulator noted the likelihood of a slowdown in GDP growth in the first quarter due to interruptions in the supply of a number of goods against the backdrop of abnormal weather. CB economists expect the economy to grow by 4.5-5% this year.

In foreign markets, a positive price environment is expected for the main export items. However, due to the expected slowdown in the growth of the global economy and in particular the main partners, high uncertainty remains.

In the baseline scenario, annual inflation will slow down to 8.5-9.5%. The Central Bank intends to track the impact of monetary conditions on demand, prices and expectations in order to bring inflation down to 5%.