Economic growth in Uzbekistan to be 5.5% in 2024 due to impact of higher prices on household income

“Uzbekistan saw a commendable uptick in economic growth last year, thanks to the robust performance in the industrial and agricultural sectors,” said Kanokpan Lao-Araya, ADB’s Country Director for Uzbekistan.

 Economic growth in Uzbekistan is expected to decrease in 2024 due to the impact of higher prices on household disposable income, according to a new flagship report from the Asian Development Bank (ADB).

In its Asian Development Outlook (ADO) April 2024, ADB projects gross domestic product (GDP) growth for Uzbekistan to be 5.5% in 2024, followed by a slight uptick to 5.6% in 2025. Growth is projected to slow down due to the impact of increased administered prices on household income, which could lead to reduced consumer demand.

“Uzbekistan saw a commendable uptick in economic growth last year, thanks to the robust performance in the industrial and agricultural sectors,” said Kanokpan Lao-Araya, ADB’s Country Director for Uzbekistan. “This surge was backed by a strong investment climate and a strategic tax exemption policy for essential foods, which, in tandem with a tight monetary stance, has contributed to a notable deceleration in inflation.”

Despite the projected slowdown in 2024, the economic outlook remains cautiously optimistic. The services and agricultural sectors are expected to see slower growth, while private consumption and investment are also projected to lose some momentum. Inflation rates are forecast to hold steady as the effects of ongoing structural energy reforms and monetary tightening balance.

Fiscal policies, however, face challenges as structural reforms and increased social spending may constrain efforts toward fiscal consolidation and deficit reduction. Consequently, the fiscal deficit is expected to widen, with a corresponding increase in the current account deficit due to rising imports and cooling income inflows.

According to ADB, a green development policy is critical for Uzbekistan’s transition to a green economy. The current fragmentation of green policies across various ministries and agencies poses a risk to the efficient pursuit of a green economy. The establishment of a dedicated climate policy council is proposed as a viable solution to streamline efforts, enhance coordination, and accelerate the nation's transition towards sustainable economic practices.

Uzbekistan joined ADB in 1995 and then bank has since committed loans, grants, and technical assistance amounting to $12.5 billion to the country.