According to the World Bank report, the country's economic growth may gradually accelerate. An acceleration in imports and a slight reduction in poverty among the population is also predicted.
The World Bank estimates that economic growth in Uzbekistan will approach 5.5% in 2023 and could gradually accelerate over the medium term, reaching 5.6% and 5.8% in 2024 and 2025, respectively. This follows from the bank's report on the economy of the Europe and Central Asia region.
Consumption growth will drop in 2023, which is associated with decreasing volumes of remittances from Russia.
Import growth is expected to accelerate this year. Its volumes will continue to grow in the medium term to maintain the pace of economic modernization. As remittances decline, the country's current balance of payments deficit will continue to widen.
The fiscal deficit is projected to widen to 5% in 2023 due to high energy sector spending, higher education costs, wages, pensions and benefits in the public sector, and lower government revenue receipts.
The government is expected to consolidate the budget over the medium term, reducing the budget deficit to 4% of GDP in 2024 and 3.6% in 2025. This will be due to a reduction in tax incentives for state-owned enterprises, a decrease in the cost of energy subsidies, as well as an increase in financial revenues from the privatization of state assets.
The report notes that the government will adhere to its own restrictions on external borrowing. However, public debt increased to 36% of GDP in 2023 and will reach a peak of 36.6% next year.
Despite the expansion of government social protection programs, slowing growth in remittances and private consumption could limit expected progress in reducing poverty in Uzbekistan. It is predicted that the poverty level among the population will decrease slightly – to 13.9%.
“Downside risks to this outlook include a worsening economic situation in Russia, higher external inflation pressures, and tighter-than-expected global financial conditions.
Potential positive trends for the economy include higher global prices for gold, natural gas, and copper (Uzbekistan is an exporter of these commodities), as well as faster productivity growth in sectors of the economy as a result of structural reforms implemented by the government,” the report says.
Overall, economic growth in Central Asia is expected to accelerate to 4.8% this year, with average growth in 2024 and 2025 projected at 4.7%, assuming inflation effects.
