In an update to its flagship annual economic publication

• TASHKENT, UZBEKISTAN (15 SEPTEMBER 2020) — ECONOMIC GROWTH IN UZBEKISTAN IS PROJECTED TO FURTHER DECELERATE THIS YEAR AS A RESULT OF THE CORONAVIRUS DISEASE (COVID-19) PANDEMIC, WEAK DEMAND, SLOWING INDUSTRIAL OUTPUT, AND A DECLINE IN SERVICES, ACCORDING TO A NEW REPORT RELEASED BY THE ASIAN DEVELOPMENT BANK (ADB).
• IN AN UPDATE TO ITS FLAGSHIP ANNUAL ECONOMIC PUBLICATION, ASIAN DEVELOPMENT OUTLOOK (ADO) 2020, ADB FORECASTS UZBEKISTAN’S GDP GROWTH AT 0.5% IN 2020, DOWN FROM THE 1.5% FORECAST IN JUNE. HOWEVER, GDP IS EXPECTED TO REBOUND STRONGLY TO 6.5% IN 2021, CONSISTENT WITH ADB’S PROJECTION EARLIER THIS YEAR.
• “WHILE OUR REPORT ESTIMATES REDUCED GROWTH THIS YEAR, IT IS EXPECTED TO REBOUND IN 2021 WITH ANTICIPATED RECOVERY IN SERVICES AND INDUSTRY,” SAID ADB COUNTRY DIRECTOR FOR UZBEKISTAN CINDY MALVICINI. “WE CONTINUE TO STAND BY THE PEOPLE OF UZBEKISTAN, HELPING TO MITIGATE THE ADVERSE HEALTH, SOCIAL, AND ECONOMIC IMPACTS OF THE DISEASE, SO THAT THE COUNTRY CAN OVERCOME THE PANDEMIC AND THE ECONOMY CAN RECOVER AS QUICKLY AS POSSIBLE.”

• THE BANK’S FORECASTS FOR INFLATION REMAIN UNCHANGED AT 13% IN 2020 AND 10% IN 2021. PANDEMIC-RELATED DISRUPTIONS RAISED FOOD PRICE INFLATION IN THE FIRST 7 MONTHS OF 2020, WHILE INFLATION FOR OTHER GOODS AND SERVICES IN THE SAME PERIOD SLOWED. MEANWHILE, DEPRECIATION OF THE UZBEK SUM YEAR ON YEAR AGAINST THE US DOLLAR ROSE FROM 2.5% IN THE FIRST HALF OF 2019 TO 6.7% THIS YEAR.
• UZBEKISTAN’S CURRENT ACCOUNT DEFICIT WIDENED TO 7.7% OF GDP IN THE FIRST HALF OF 2020 FROM 6.8% IN THE SAME PERIOD LAST YEAR, AS TRAVEL RESTRICTIONS AND WEAKNESS IN THE RUSSIAN FEDERATION CUT REMITTANCES, WHILE EXPORTS OF GOODS FELL BY 19.7% WITH LOWER DEMAND AND PRICES FOR NATURAL GAS AND COPPER. SUPPLY CHAIN DISRUPTIONS CUT IMPORTS OF GOODS BY 14.1%, WITH NOTABLE DECLINES IN IMPORTS FOR CONSTRUCTION AND INDUSTRY. EXPORTS OF SERVICES DROPPED BY 38.6%, AND IMPORTS BY 28.4%. WITH CONTINUED WEAKNESS IN EXPORTS AND REMITTANCES, THE BANK PROJECTS A WIDER CURRENT ACCOUNT DEFICIT IN 2020, NARROWING IN 2021 AS EXPORTS AND REMITTANCES RECOVER.

• Since gaining independence, the Government of Uzbekistan 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.

•