The IMF noted that Uzbekistan's economy has shown remarkable resilience to recent global challenges.
The Economy of Uzbekistan Has Demonstrated Exceptional Resilience to Recent Global Challenges, Says the IMF
From December 11 to 19, 2023, an IMF mission led by Yasser Abdih held meetings with official bodies of Uzbekistan to discuss the current economic situation, development prospects, and economic policy priorities.
“The economy of Uzbekistan has shown remarkable resilience to the recent global challenges. Geopolitical upheavals have led to an influx of migrants and a significant increase in remittances entering the country's economy in 2022, which boosted domestic demand. Combined with higher external demand, this resulted in a 5.7 percent growth in real GDP in 2022,” Abdih stated.
Forecast and Risks for 2024
- The economy is expected to grow by more than 5%, despite budget consolidation.
- The current account deficit will slightly increase due to a decrease in gold exports and a slowdown in imports.
- External risks are linked to the slowdown in growth in China and Russia and the deterioration of financial conditions. Internal risks are associated with the obligations of state and public-private partnerships.
Budget Consolidation in 2024-2025
In 2023, expansionary policies led to a budget deficit of 5.5% of GDP. The government plans to reduce this to 4% of GDP in 2024 and to 3% of GDP in 2025 to increase reserves, lower inflation, and assist the poor. To achieve this, it will optimize expenditures, eliminate tax benefits, and combat the shadow economy.
Tight Monetary Policy to Reduce Inflation
Rising energy prices will increase inflation, but a strict monetary policy and budget consolidation will help mitigate it. The central bank adheres to a tight policy and raises rates if inflation rises. It is necessary to strengthen the transmission mechanism of the policy, which is weak due to low financial intermediation, dollarization, and directive lending. Flexibility in the exchange rate is needed to absorb shocks and maintain reserves.
According to the IMF forecast, GDP growth in Uzbekistan is expected to be 5.2%.