Against the backdrop of high demand in the economy, the regulator predicts an acceleration in inflation growth.
On January 25, the board of the Central Bank decided to keep the refinancing rate unchanged – at 14% per annum.
In recent months, overall inflation has been 8.8%. Despite the decline in consumer inflation, at the end of the year, price growth in the service sector accelerated slightly, which is explained by the mismatch of supply to the conditions of high demand in the economy.
The Central Bank notes the likelihood of an increase in inflation rates due to increased pressure from demand.
In addition, surveys of households and businesses show that perceived inflation and inflation expectations remain high.
In 2023, Uzbekistan’s GDP grew by 6%. Economic growth was supported by high growth rates of fixed investment, positive credit dynamics, fiscal incentives and remittances.
Against the backdrop of tough financial conditions, balancing labor markets and declining dynamics of commodity prices in the global economy, the regulator expects a slowdown in global inflation.
The Central Bank does not predict high pressure on the real effective exchange rate of the Uzbek soum in the near future.
The reduction in the structural liquidity surplus in the banking system led to the intensification of operations in the money market. This year, monetary operations will be used to form short-term interest rates within the interest rate corridor.
Due to high positive real interest rates on deposits in the national currency, the volume of bank deposits is expected to continue to grow.
In 2024, headline inflation is projected at 8-9%, and core inflation at around 7-8%.
This year, the economic development of Uzbekistan will depend on external and internal factors – in particular, the pace of structural reforms, budget discipline and the effectiveness of monetary policy.
The Central Bank is taking steps to mitigate the potential one-off impact on domestic prices in the coming months from expected changes in some regulated prices, recent changes to excise tax and VAT.
This year, real GDP growth will be 5.5-6%, driven by consumer demand, increased foreign and domestic direct investment, and structural reforms.
In addition, the regulator intends to make decisions on the main rate to achieve the annual inflation target of 5%.
