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: 2021-10-10

Despite a challenging year, Uzbekistan managed to achieve 1.6 percent economic growth, with GDP rising to 580.2 trillion Soum ($57.7 billion) in 2020. However, as measured in US dollars, GDP stayed almost the same at $57.7 billion due to a 10.2% depreciation of the national currency against the dollar. The construction industry remained a major driver for the economy and the number of active projects increased by 9.1% after the government permitted implementation of public and private construction projects during the pandemic. Consumer goods production, agriculture and retail trade grew by 3-3.6%. Uzbekistan’s foreign reserves benefited due to windfall profits from the export of 100 tons of gold when the global market price peaked in 2020, offsetting losses from the 78% decline in natural gas exports. In addition, Uzbekistan relied on foreign capital to finance its anti-pandemic and economic support initiatives, leading to a $9.4 billion (or 38.5%) rise in external debt. Annual inflation in 2020 declined compared to the previous two years: the GDP deflator was 11.9% and consumer price inflation was 12.9%, compared to a 2019 baseline.

  • Key Economic Indicators:

 

2019

2020

Nominal GDP (billion USD)

57.9

57.7

Consumer price inflation (percent)

15.2

12.9

Foreign Direct Investment (billion USD)

2.28

1.7

Current account balance (billion USD)

-3.2

-3.1

Exports (billion USD)

17.9

15.1

Imports (billion USD)

24.3

21.2

External debt, private and public (billion USD)

24.4

33.8

Gross international reserves (billion USD)

29.2

34.9

(Source: State Statistics Committee, the Central Bank)      

The coronavirus crisis negatively impacted global trade. Uzbekistan’s foreign trade turnover shrank from $42.2 billion in 2019 to $36.3 billion in 2020 – of which exports amounted to $15.1 billion and imports to $21.2 billion. Interestingly, Uzbekistan’s trade deficit narrowed only by $0.3 billion. The country continued its industrialization policy of importing new capital equipment to modernize its manufacturing sector and infrastructure, with the machinery and transport sectors accounting for 37.6% of the total volume of imports. Uzbekistan’s main export item in 2020 was gold – comprising 38.3% of exports or $5.8 billion.

Major Trade Partners (Uzbekistan official statistics, 2020):

China, 17.7%

Russia, 15.5%

Kazakhstan, 8.3%

Korea, 5.9%

Turkey, 5.8%

In 2020 Uzbekistan’s trade with the United States declined from $603.9 million to $275.1 million. The $318.9 million drop in imports from the U.S. put the United States in 17th place in the list of trade partners. Due to the relatively low volume of trade between the United States and Uzbekistan, major capital purchases, such as Uzbekistan Airways’ acquisition of U.S.-made aircraft for its fleet, can cause significant variances in bilateral trade from year to year.

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 will hold its next Presidential election on October 24, 2021. After winning election in 2016, President Mirziyoyev implemented a reform program to turn Uzbekistan from a closed, isolationist country to one eager to cooperate with its neighbors, as well as regional and global powers. The government started to implement reforms required for transition to a more transparent, competitive and market-based economy in 2017.  

Uzbekistan has signed bilateral agreements with 54 countries 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 47 countries. 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. On December 11, 2020 Uzbekistan joined the Eurasian Economic Union (EAEU) as an observer. On April 9, 2021, the European Union accepted Uzbekistan as the ninth beneficiary of a General System of Preferences Plus (GSP+) trade arrangement, which removed tariffs on two thirds (6,200 titles) of the product lines covered by GSP in return for Uzbekistan implementing 27 ratified core international conventions on human and labor rights, environmental and climate protection, and good governance. Uzbekistan is also working on joining the World Trade Organization (WTO).

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. However, the current escalation of the conflict between the Taliban and Afghanistan government forces is concerning to Uzbekistan and other countries of the region. President Biden announced that the United States and NATO will complete withdrawal of troops from Afghanistan by August 31, 2021. The U.S. and Uzbekistan have been active in Afghanistan peace talks during the last few years. Moreover, on February 2, 2021, Uzbekistan, Pakistan and Afghanistan signed a roadmap on construction of a planned 573-km-long Mazar-e-Sharif-Kabul-Peshawar railway and sent a joint letter to international financial institutions (IFIs) requesting a $4.8 billion loan. If completed, the railway will grant the Central Asian countries access to the Indian Ocean and could significantly expand the region’s access to global markets.

With an estimated population of 34 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. Based on the estimates of multilateral development banks (MDBs), Uzbekistan’s GDP will grow 5-6% in 2021-2022. According to the official statistics, GDP grew 6.2% in the first half of 2021. Fitch maintains Uzbekistan’s outlook as stable, while S&P has recently changed it from negative to stable, and Moody’s upgraded it from stable to positive. In May 2021, Deputy Prime Minister and Minister of Economic Development and Poverty Reduction Jamshid Kuchkarov declared that the government had set its goal to increase per capita GDP from the current $1,700 to $2,500 by 2025, and $4,200 by 2030.