Uzbekistan - Country Commercial Guide
Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.

Last published date: 2020-10-14

According to official reports of the Government of Uzbekistan (GOU), Uzbekistan’s GDP grew by 5.6% to 511.8 trillion Soum ($57.9 billion) in 2019.  The GDP deflator to prices of 2018 was 19.2%.  Industrial production and the construction sector were the main drivers of the economy – supported by state funded investment projects, they demonstrated a 13% year-on-year output increase.  The annual inflation rate reached 15.2%.  For 2020, taking the pandemic into account, the Central Bank of Uzbekistan (CBU) projects the inflation rate to be between 11-12.5%.  The relatively high inflation rate results from ongoing economic reforms, including the September 2017 foreign exchange rate liberalization.

  • Key Economic Indicators:

 

2018

2019

Nominal GDP (billion USD)

50.4

57.9

Consumer price inflation (percent)

14.3

15.2

Foreign Direct Investment (billion USD)

0.62

2.28

Current-account balance (billion USD)

-3.6

-3.2

     

Exports (billion USD)

14.0

17.9

Imports (billion USD)

19.4

24.3

External debt, private and public (billion USD)

17.3

24.4

Gross international reserves (billion USD)

27.1

29.2

     
     
     
     
     

(Source: Data by country authorities and IMF estimates as of May 12, 2020)      

Three years ago, Uzbekistan President Mirziyoyev started ambitious liberalization reforms to unlock the country’s potential for international business.  In September 2017, the government removed long-standing currency conversion restrictions and liberalized its monetary policy.   The soum, the local currency of Uzbekistan, demonstrated about a 2.8% year-on-year depreciation until 2019, when it depreciated 12.3%.  Depreciation has reached 6.9% in the first half of 2020.  Standard & Poor and Fitch indicate that growing foreign trade turnover of the country and considerable net FX reserves made its mid-term outlook stable.

The volume of Uzbekistan’s foreign trade turnover in 2019 grew by 26.3% year-on-year to $42.2 billion, whereas exports contributed $17.9 billion and imports $24.3 billion.  The trade deficit has grown from $5.4 billion in 2018 to $6.4 billion by the end of 2019 due to a increased demand for machinery and equipment for industrial development. 

Major Trade Partners (Uzbekistan official statistics, 2019):

  • China, 18.1%
  • Russia, 15.7%
  • Kazakhstan, 8%
  • Korea, 6.5%

The United States of America is Uzbekistan’s 9th largest trade partner.  In 2019, the volume of bilateral trade turnover increased by $186.2 million to $596.2 million.

Uzbekistan’s Constitution provides for a presidential system with separation of powers and a representative government.  In practice, power is highly concentrated in the office of the president and the executive branch.

Uzbekistan has signed numerous bilateral agreements on the avoidance of double taxation, though the United States considers its 1973 U.S.-USSR tax treaty as in force regarding Uzbekistan, while the Government of Uzbekistan does not.  Uzbekistan also has treaties providing most-favored-nation treatment with more than 45 countries.  Several agreements, including those with Iran, Japan, and the United States, are not yet in effect (U.S.-Uzbekistan agreements on trade relations, including most favored nation status, and on encouraging and reciprocally protecting investment, were completed in 1994 but never ratified by the United States.).  In 2014, Uzbekistan joined the CIS Free Trade Zone Agreement.  In 2020, Uzbekistan joined the Eurasian Economic Union (EAEU) as an observer.

Violent extremist groups in Central Asia, including the Islamic Movement of Uzbekistan, al-Qa’ida, and DAESH, have not represented a threat to foreign businesses in Uzbekistan in recent years.

With an estimated population of 33 million, Uzbekistan has the foundation needed to become a regional economic powerhouse: a dynamic, literate, and entrepreneurial population –  the largest in Central Asia, relatively good infrastructure; and the largest potential consumer market in the region.  Uzbekistan’s cotton industry and rich natural resources such as gold and natural gas offer attractive opportunities for investors.  The government’s declared economic policy prioritizes the attraction of private investments through improvement of Uzbekistan’s business climate, privatization, and liberalization of foreign trade.