Commercial buildings in Tashkent
CIS and ECO;
observer status in
70th (PPP, 2012)
7.9% (2015), 7.8%
12.1% (CPI, 2014
Unemployment 4.9% officially,
plus another 20%
Economy of Uzbekistan
Since gaining independence, the has stated that it is committed to a gradual transition to a market-based economy. The progress with economic
policy reforms has been a cautious one, but cumulatively Uzbekistan has shown respectable achievements. The government is yet to eliminate the
gap between the black market and official exchange rates by successfully introducing convertibility of the national currency. Its restrictive trade
regime and generally interventionist policies continue to have a negative effect on the economy. Substantial structural reform is needed,
particularly in these areas: improving the investment climate for foreign investors, strengthening the banking system, and freeing the agricultural
sector from state control. Remaining restrictions on currency conversion capacity and other government measures to control economic activity,
including the implementation of severe import restrictions and sporadic closures of Uzbekistan's borders with neighboring Kazakhstan,
Kyrgyzstan, and Tajikistan have led international lending organizations to suspend or scale back credits.
Working closely with the IMF, the government has made considerable progress in reducing inflation and the budget deficit. The national currency
was made convertible in 2003 as part of the IMF-engineered stabilization program, although some administrative restrictions remain. The
agriculture and manufacturing industries contribute equally to the economy, each accounting for about one-quarter of the GDP.
Uzbekistan is a
Uzbekistan is also a big producer of gold, with the largest open-pit gold mine in the world. The country has substantial deposits
This is a chart depicting the trend of the gross domestic product in Uzbekistan in constant prices of 1995, estimated by the International Monetary
Fund with figures in millions of som.
the end-of-year U.S. dollar exchange rate from the Central Bank of the Uzbekistan database.
For purchasing power parity comparisons in 2006,
Uzbekistan's GDP, like that of all CIS countries, declined
1995, as the cumulative effect of policy reforms began to
be felt. It has shown robust growth, rising by 4% per year
between 1998 and 2003, and accelerating thereafter to
7%-8% per year. In 2011 the growth rate came up to 9%.
Given the growing economy, the total number of people
employed rose from 8.5 million in 1995 to 13.5 million in
This healthy increase of nearly 25% in the labor
force lagged behind the increase in GDP during the same
period (64%, see chart), which implies a significant
increase in labor productivity. Official unemployment is
very low: less than 30,000 job seekers were registered in
government labor exchanges in 2005-2006 (0.3% of the
Underemployment, on the other hand, is
accounts for fully 28% of all employed, many of them working part-time on tiny household plots. However
, no reliable figures are available due to
the absence of credible labor surveys.
Uzbekistan: Growth of GDP in constant prices 1992-2008.
$12.5 billion (2014
$8.751 billion (31
7.5% of GDP
from the U.S.
$18 billion (31
The minimum wage, public-sector wages, and old-age pensions are routinely raised twice a year to ensure that base income is not eroded by
inflation. Although no statistics are published on average wages in Uzbekistan, pensions as a proxy for the average wage increased significantly
between 1995 and 2006, both in real terms and in U.S. dollars. The monthly old-age pension increased in real (CPI-adjusted) sums by almost a
factor of 5 between 1995 and 2006.
2001 and 2004, and now is $64. The minimum wage was raised to $34.31 in November 2011.
Assuming that the average wages in the country
According to the forecast by the Asian Development Bank, the GDP in Uzbekistan in 2009 is expected to grow by 7%.
Meanwhile, in 2010 the
Uzbekistan GDP growth is predicted at 6,5%.
technical and managerial training does not meet international business standards, but foreign companies engaged in production report that locally
hired workers learn quickly and work effectively. The government emphasizes foreign education. Each year hundreds of students are sent to the
United States, Europe, and Japan for university degrees, after which they have a commitment to work for the government for 5 years. Reportedly,
about 60% of students who study abroad find employment with foreign companies upon completing their degrees, despite their 5-year
commitment to work in the government. Some American companies of
fer their local employees special training programs in the United States.
In addition, Uzbekistan subsidizes studies for students at Westminster International University in Tashkent—one of the few Western-style
institutions in Uzbekistan. In 2002, the government "Istedod" Foundation (formerly as "Umid" Foundation) is paying for 98 out of 155 students
studying at Westminster. For the next academic year, Westminster is expecting to admit 360 students, from which Istedod is expecting to pay for
160 students. The education at Westminster costs $5,200 per academic year. In 2008 Management Development Institute of Singapore at Tashkent
started its work. This university provides high quality education with international degree. Tuition fee was $5000 in 2012. In 2009 Turin
Polytechnik University was opened. It is the only university in Central Asia that prepares high quality employees for industries. With the closing
or downsizing of many foreign firms, it is relatively easy to find qualified employees, though salaries are very low by Western standards. Salary
caps, which the government implements in an apparent attempt to prevent firms from circumventing restrictions on withdrawal of cash from
banks, prevent many foreign firms from paying their workers as much as they would like. Labor market regulations in Uzbekistan are similar to
those of the Soviet Union, with all rights guaranteed but some rights unobserved. Unemployment is a growing problem, and the number of people
looking for jobs in Russia, Kazakhstan, and Southeast Asia is increasing each year. Uzbekistan's Ministry of Labor does not publish information
on Uzbek citizens working abroad, but Russia's Federal Migration Service reports 2.5 million Uzbek migrant workers in Russia. There are also
indications of up to 1 million Uzbek migrants working illegally in Kazakhstan.
Uzbekistan's migrant workers may thus be around 3.5-4 million
Uzbek citizens of working age live outside Uzbekistan.
Uzbekistan experienced galloping inflation of around 1000% per year immediately after independence (1992–1994). Stabilization efforts
and then to 22% in 2002. Since 2003 annual inflation rates averaged less than 10%.
The severe inflationary pressures that characterized the early years of independence inevitably led to a dramatic depreciation of the national
"coupon som" introduced in November 1993 in a ratio of 1:1 to the ruble, went up from 100 rubles/US$ in the early 1992 to 3627 rubles (or
coupon soms) in mid-April 1994. On July 1, 1994 the "coupon so
ʻm" was replaced with the permanent new Uzbek soʻm (UZS) in a ratio of
1000:1, and the starting exchange rate for the new national currency was set at 7 som/US$, implying an almost two-fold depreciation since mid-
April. Within the first six months, between July and December 1994, the national currency depreciated further to 25 som/US$ and continued
depreciating at a fast clip until December 2002, when the exchange rate had reached 969 som/US$, i.e., 138 times the starting exchange rate eight
and a half years earlier or nearly 10,000 times the exchange rate in early 1992, soon after the declaration of independence.
Then the depreciation
During the four years that followed (2003–2007) the exchange rate of the som to the US dollar increased only by a factor of 1.33, from 969 som to
around 1865 som in May 2012.
From 1996 until the spring of 2003, the official and so-called "commercial" exchange rate – both set administratively by the Central Bank – were highly overvalued. Many businesses and
individuals were unable to buy dollars legally at these "low" rates, so a widespread black market developed to meet hard currency demand. The spread between the official exchange rate and the
curb rate widened especially after the Russian financial crisis of August 1998: at the end of 1999 the curb rate stood at 550 som/US$ compared with the official rate of 140 som/US$, a gap by
nearly a factor of 4 (up from a factor of "only" 2 in 1997 and the first half of 1998).
black market, official, and commercial rates to approximately 8% and it quickly disappeared as the som was made convertible after October 2003. Today, four foreign currencies—the U.S. dollar,
the euro, the pound sterling, and the yen—are freely exchanged in commercial booths all around the cities, while other currencies, including the Russian ruble and the Kazakh tenge, are bought
and sold by individual ("black market") money changers, who are allowed to operate openly without harassment. The foreign exchange regime since October 2003 is characterized as "controlled
official rate, 2850 som/US$ vs. 1865 som/US$ (as of mid-June 2011). This curb rate is often referred to as 'bazar rate', because money changers operate at or near 'bazars' - lar
ge farmer markets.
Tax collection rates remained high, due to the use of the banking system by the government as a collection agency. Technical assistance from the World Bank, Office of Technical Assistance at the
U.S. Treasury Department, and UNDP is being provided in reforming the Central Bank and Ministry of Finance into institutions capable of conducting market-oriented fiscal and monetary policy
At the end of 2013, the government announced through the Central Bank of the Republic of Uzbekistan that it predicted agriculture as playing a major component of the country's economic
Cotton, once Uzbekistan's star cash earner, has lost much its luster since independence as wheat began to gain prominence from considerations of food security for the rapidly growing
population. Areas cropped to cotton were reduced by more than 25% from 2 million hectares in 1990 to less than 1.5 million hectares in 2006, while wheat cultivation jumped 60% from around 1
million hectares in 1990 to 1.6 million hectares in 2006. Cotton production dropped from 3 million tons annually in the pre-independence decade to around 1.2 million tons since 1995, but even at
these reduced levels Uzbekistan produces 3 times as much cotton as all the other Central Asian countries and Azerbaijan combined. Cotton exports tumbled from highs of around 45% of
Prices and monetary policy
vegetables, with food products contributing nearly 8% of total exports in 2006. Virtually all agriculture requires irrigation, but because of budgetary constraints there has been practically no
expansion of irrigated area since independence: it remains static at 4.2 million hectares, the level reached by 1990 after rapid growth during the Soviet period.
Government intervention in agriculture is reflected in the persistence of state orders for the two main cash crops, cotton and wheat. Farmers receive binding directives on the area to be cropped to
these commodities and are obliged to surrender their harvest to designated marketers at state-fixed prices. The incomes of farmers and agricultural workers are substantially lower than the national
average because the government pays them less than the world prices for their cotton and wheat, using the difference to subsidize capital intensive industrial concerns, such as factories producing
automobiles, airplanes, and tractors. Consequently, many farmers focus on production of fruits and vegetables on their small household plots, because the prices of these commodities are
determined by supply and demand, not by government decrees. Farmers also resort to smuggling cotton and especially wheat across the border with Kazakhstan and Kyrgyzstan in order to obtain
The government's discriminatory pricing for the main cash crops, cotton and wheat, is apparently responsible for the exceptionally rapid growth of the cattle herd in recent years, as the prices of
milk and meat, like those of fruits and vegetables, are also determined by market forces. The number of cattle increased from 4 million head in 1990 to 7 million head in 2006, and virtually all
these animals are maintained by rural families with just 2-3 head per household.
Sales of own-produced milk, meat, and vegetables in town markets are an important source for augmenting rural
The Soviet practice of using "volunteer labor" to help gathering the cotton harvest continues in Uzbekistan where schoolchildren, university students, medical professionals, and state employees
are driven en masse out to the fields every year.
gathered by the hands of hungry children".
Minerals and mining also are important to Uzbekistan's economy. Gold, alongside cotton, is a major foreign exchange earner, unofficially estimated at around 20% of total exports.
is the world's seventh-largest gold producer, mining about 80 tons per year, and holds the fourth-largest reserves in the world. Uzbekistan has an abundance of natural gas, used both for domestic
consumption and export; oil used for domestic consumption; and significant reserves of copper, lead, zinc, tungsten, and uranium. Inefficiency in energy use is generally high, because the low
controlled prices do not stimulate consumers to conserve energy. Uzbekistan is a partner country of the EU INOGATE energy programme, which has four key topics: enhancing energy security,
convergence of member state energy markets on the basis of EU internal energy market principles, supporting sustainable energy development, and attracting investment for energy projects of
common and regional interest.
trade regime caused both imports and exports to drop each from about US$4.5 billion in 1996 to less than US$3 billion in 2002.
The success of
increased much less rapidly: while exports had more than doubled to US$15.5 by 2011, imports had risen to US$6.5 billion only, reflecting the
impact of the government's import substitution policies designed to maintain hard currency reserves. Draconian tariffs, sporadic border closures,
and border crossing "fees" have a negative effect on legal imports of both consumer products and capital equipment. Uzbek farmers are deprived
of seasonal opportunities to sell legally their popular tomatoes and vegetables for good prices in Kazakhstan. Instead, they are forced to dump their
produce at reduced prices on local markets or alternatively continue "exporting" by paying stiff bribes to border guards and customs officers.
Uzbek consumers are deprived of access to low-cost Chinese goods that cross the border from Kyrgyzstan in normal times. Uzbekistan's traditional
over 40% of its exports and imports.
Non-CIS partners have been increasing in importance in recent years, with Turkey, China, Iran, South Korea,
Uzbekistan is a member of the International Monetary Fund, World Bank, Asian Development Bank, and European Bank for Reconstruction and
Development. It has observer status at the World Trade Organization, is a member of the World Intellectual Property Organization, and is a signatory
to the Convention on Settlement of Investment Disputes Between States and Nationals of Other States, the Paris Convention for the Protection of
the special "301" Watch List for lack of intellectual copyright protection.
According to EBRD transition indicators,
the least favorable in the CIS, with only Belarus and Turkmenistan ranking lower. The
unfavorable investment climate has caused foreign investment inflows to dwindle to a trickle. It is believed that Uzbekistan has the lowest
level of foreign direct investment per capita in the CIS. Since Uzbekistan's independence, U.S. firms have invested roughly $500 million in
the country, but due to declining investor confidence, harassment, and currency convertibility problems, numerous international investors
have left the country or are considering leaving.
In 2005, the Central Bank has revoked the license of the nascent Biznes Bank citing
deposits stay arrested for two month. No interest was accrued during that two-month period. In 2006, the Government of Uzbekistan forced
out Newmont Mining Corporation (at the time the largest U.S. investor) from its gold mining joint venture in the Muruntau gold mine.
Newmont and the government resolved their dispute, but the action adversely affected Uzbekistan's image among foreign investors. The
government attempted the same with British-owned Oxus Mining. Coscom, a U.S.-owned telecommunications company, involuntarily sold
its stake in a joint venture to another foreign company. GM-DAT, a Korean subsidiary of GM, is the only known U.S. business to have
entered Uzbekistan in over two years. It recently signed a joint-venture agreement with UzDaewooAuto to assemble Korean-manufactured cars for export and domestic sale. Other large U.S.
investors in Uzbekistan include Case IH, manufacturing and servicing cotton harvesters and tractors; Coca-Cola, with bottling plants in Tashkent, Namangan, and Samarkand; Texaco, producing
lubricants for sale in the Uzbek market; and Baker Hughes, in oil and gas development.
Uzbekistan’s banks have demonstrated reasonably stable performance in a largely state-dominated local economy. Sector stability is currently supported by rapid economic growth, low exposure
to external financial markets and the strong external and fiscal position of the sovereign. However, the sector remains vulnerable to possible economic shocks due to weak corporate governance
and risk management, fast recent asset growth, significant directed lending and acquisitions of problem assets. Banks’ foreign currency obligations, specifically those arising from trade finance,
are particularly vulnerable due to existing foreign exchange constraints.
Uzbekistan exports in 2006
Graphical depiction of
Uzbekistan's product exports in
28 color-coded categories.
Daewoo Gentra is currently a flagship of
current accounts, while retail funds account for only a small 25% of total deposits. Longer-term funding is provided by the Ministry of Finance and other state agencies, which comprise a notable
proportion of sector liabilities. Foreign funding is small, estimated at about 10% of the total liabilities, and plans for further borrowings are moderate. Liquidity management is constrained be the
lack of deep capital markets, and banks generally tend to hold substantial cash reserves on their balance sheets. The quality of capital is sometimes compromised by less conservative regulatory
requirements for recognition of credit impairment and by investments in non-core assets.
Silk road route's three important cities are located in Uzbekistan, namely Khiva, Bukhara and Samarkand. There are numerous well connected tourist destinations in Uzbekistan.
There are five
GDP in $
/d) (2004 est.)
/d) (2001 est.)
) (1 January 2002)
gy products 4.3%, services 9.1% (2006)
UZS per EUR - 2,900
Special economic zones of Uzbekistan
Retrieved from "https://en.wikipedia.org/w/index.php?title=Economy_of_Uzbekistan&oldid=867879662
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