Uzbekistan Business & Economy - The Times Of Central Asia

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Education

Opinion: Uzbekistan’s Growth Story Has a Skills Problem

Uzbekistan has become one of Central Asia's strongest growth stories. GDP expanded by 6.5% in 2024, and the Asian Development Bank projects growth of 6.7% in 2026 and 6.8% in 2027. Industry, services, and foreign investment are all expanding. The World Bank says real GDP growth averaged around 6% a year between 2017 and 2025. Beneath that momentum, however, a quieter problem is taking shape. Uzbekistan may not yet be training enough workers for the economy it is trying to build. The issue is not a shortage of capital; it is a shortage of market-ready skills. The country has moved from an isolated, heavily state-controlled economy toward a more open and reform-driven model in less than a decade. But if education, vocational training, and private-sector demand do not align faster, Uzbekistan risks turning one of the region's strongest demographic advantages into a labor-market strain. A Dividend That Could Become a Deficit Uzbekistan is a young country in every sense. About 700,000 young people enter the job market each year, while the working-age population is expected to keep expanding for decades. In development economics, this kind of demographic concentration is often described as a dividend: a period when a large share of the population is of working age, productive, and capable of driving growth. The risk is that the dividend does not materialize automatically. It depends on whether young people can move into productive, formal, and better-paid work. If the workforce entering the economy is not equipped with the skills employers need, the same demographic pressure can feed into informality, underemployment, migration, and social strain. The official unemployment rate fell to 4.9% in the third quarter of 2025. That is a meaningful improvement. But around 760,000 people remained registered as job seekers, and the International Labour Organization has estimated informal employment at about 40% of the workforce. Remittances also remain a structural pillar of household income: according to Central Bank data cited by local media, inflows reached $18.9 billion in 2025, up from $14.8 billion in 2024. This is not the picture of a country that has already solved its human-capital challenge. It is the picture of a country racing against time. The Mismatch at the Heart of the Problem The core challenge is not a shortage of graduates. Higher education has expanded dramatically. According to Uzbekistan's National Statistics Committee, coverage among 18- to 23-year-olds reached 47.7% at the start of the 2024/2025 academic year, up from 8.3% in 2017. The number of higher education institutions has also grown rapidly. By conventional access metrics, this is an extraordinary achievement. But enrollment alone is not the measure that matters. Employers need workers who can solve practical problems, operate modern equipment, manage digital systems, and adapt quickly to changing production and service needs. Too many students are still moving through programs shaped by an older economic model: credential-heavy, theoretically oriented, and weakly connected to the needs of a modern labor market in IT, manufacturing, logistics, energy, tourism, and services. The student-financing system has...

Hydropower

Uzbekistan Plans $5.8 Billion Expansion of Hydropower Sector

Uzbekistan is planning a major expansion of its hydropower sector, with 73 new projects worth $5.8 billion scheduled for implementation between 2026 and 2032, officials said during a presentation to Shavkat Mirziyoyev. According to the briefing, the country aims to add 3.6 gigawatts of new generating capacity as part of efforts to diversify its energy mix. Currently, most of Uzbekistan’s electricity is produced from natural gas and coal, while hydropower accounts for only about 10-12%. Officials emphasized that Uzbekistan’s extensive water network, more than 150,000 kilometers of rivers, canals, and streams, represents a largely untapped energy resource. Expanding hydropower is seen as key to improving energy stability, reducing dependence on fossil fuels, and making more efficient use of water. The sector has already seen significant growth in recent years. The number of hydroelectric power plants has increased from 36 in 2017 to 100 in 2025, while installed capacity has risen from 1.6 gigawatts to 2.4 gigawatts. Among the projects discussed, the Upper Pskem hydropower plant in the Bostanlyk district stands out. With an investment of $365 million, it is expected to generate 160 megawatts of electricity and supply power to around 161,000 households. In the Fergana region, a 15-megawatt plant is planned in the Sokh district, which is expected to cover 71% of local electricity demand. Authorities also reviewed the potential for constructing 42 small hydropower plants in the Upper Tupalang area, which could add 541 megawatts of capacity and generate up to 1.9 billion kilowatt-hours annually. In addition, nearly 3,000 small and micro hydropower plants are planned, with a combined capacity of 164 megawatts. This year alone, 13 hydropower plants and one wind power facility are expected to come online, with a total capacity of 114 megawatts and annual generation of 537 million kilowatt-hours. A 20-megawatt wind project is also under construction in Bostanlyk with $28 million in grant funding. Officials said Uzbekistan is also considering the construction of three pumped-storage hydropower plants with a combined capacity of 1.4 gigawatts, which would help balance electricity supply and demand. The presentation highlighted ongoing efforts to modernize the sector through digital technologies. More than 3,500 monitoring devices have already been installed to track water levels, weather conditions, and infrastructure performance in real time. The plans build on earlier developments in the sector. Last year, Uzbekistan launched the first stage of the Naryn hydropower cascade, a project valued at over $428 million. The initial plant, built using domestic materials and equipment, produces 171 million kilowatt-hours annually and supplies electricity to around 430,000 households.

Afghanistan

Uzbekistan Expands Afghan Rail Capacity to Support Growing Trade

A new 1,000-meter siding track has been completed at Naibabad railway station in Afghanistan, aimed at increasing freight handling capacity and improving the efficiency of rail operations, according to Uzbekistan Railways. The project was implemented by Uzbekistan Railways in cooperation with Sogdiana Trans. The additional track is expected to significantly expand the station’s throughput and accelerate loading and unloading processes, reducing delays and congestion along the route. Afghanistan plays a key role in regional connectivity, linking Central Asia with South Asia through transport corridors that pass through its territory. Naibabad is expected to serve as an important hub for the movement of goods from countries such as Russia, Kazakhstan, and China to markets in Pakistan and India. The development comes amid a steady increase in cargo volumes between Uzbekistan and Afghanistan. The Hayraton-Naibabad-Mazar-i-Sharif corridor has become an important route for regional trade, and infrastructure upgrades are seen as essential to maintaining stable freight flows. According to project details, the new siding will enable more efficient processing of freight wagons and help prevent bottlenecks along the line. It is also expected to improve service quality for customers and support the long-term development of Naibabad station. Uzbekistan Railways noted that the project reflects the country’s ongoing efforts to modernize railway infrastructure in Afghanistan and strengthen cross-border logistics links. Cooperation with Sogdiana Trans has further reinforced their position as long-term partners in the development of Afghanistan’s rail sector. The expansion builds on earlier work at the station. In 2024, Uzbekistan Railways reported that the restored Naibabad station officially reopened on August 7, following reconstruction carried out in cooperation with the Termez regional railway hub and Sogdiana Trans. The arrival of the first freight cars marked the resumption of operations. As freight traffic along the corridor continues to grow, Uzbekistan Railways and its partners, in coordination with Afghanistan’s Ministry of Public Works, are continuing efforts to modernize infrastructure along the route.

Nuclear Power

Uzbekistan Plans $1 Billion for First Two Small Nuclear Reactors

Uzbekistan is planning to invest nearly $1 billion in the construction of its first two small reactors as part of an integrated nuclear power plant, according to officials speaking at a major industrial exhibition in Tashkent. The estimate was announced by the Deputy Chairman of the country's Chamber of Commerce and Industry, Sukhrob Abdurakhmonov, during the “Innoprom. Central Asia” exhibition, held from April 20 to 22. The event was organized by Uzbekistan’s Ministry of Investment, Industry and Trade together with Russia’s Ministry of Industry and Trade, local media outlet Gazeta.uz reported. Abdurakhmonov said the first phase of the project involves the construction of two small reactors, each with a capacity of 55 megawatts. “Even at the initial stage, the project, valued at approximately $1 billion, will require a large volume of high-quality products,” he said during a panel session. He noted that the scale of the project is expected to push local industries toward higher standards, from electrical equipment manufacturing to construction materials. “We see this as a strong incentive for the modernization of production,” he added. The nuclear plant is planned for the Jizzakh region, where officials expect the development of a broader economic cluster. According to Abdurakhmonov, the project could stimulate growth in related sectors such as services, transport, logistics, and social infrastructure, creating thousands of jobs and new opportunities for small and medium-sized businesses. The announcement follows agreements signed in March between Uzatom and Rosatom on cooperation and further steps in the nuclear power project. Speaking earlier to reporters, Alexey Likhachev said the initiative could also generate significant economic benefits for Russia. He estimated that even a small reactor project in Uzbekistan could bring orders worth up to $22 billion for Russian companies and create around 1,000 jobs.

Agriculture

Uzbekistan Leases 4,000 Hectares in Belarus, Signs 60,000-Ton Export Deal

Uzbekistan’s Kashkadarya region has agreed to lease 4,000 hectares of farmland in Belarus and signed a major export contract as part of efforts to expand agricultural cooperation between the two countries, according to Dunyo Information Agency. The agreements were reached during a working visit to Belarus by a delegation from Kashkadarya region. As part of the trip, Uzbek representatives visited livestock and retail facilities in the Vitebsk region, including the districts of Braslav, Shumilino, and Postavy, where they studied local production practices. Talks with the leadership of the Vitebsk Regional Executive Committee focused on strengthening economic ties and building joint production chains. One of the key outcomes was a deal between Uzbek companies “Asl Yuksalish Savdo” and “Muborak qorako‘lchilik” and the Belarusian “Sirotinsky” livestock farm. Under the agreement, the Uzbek side will lease farmland on a long-term basis to launch an agricultural project. The first stage involves breeding 1,000 head of cattle, marking the beginning of a broader investment in livestock production. At the same time, Uzbekistan is expanding its export presence in the Belarusian market. “Asl Yuksalish Savdo” signed a contract with the retail chain CJSC “Dobronom” to supply 60,000 tons of agricultural products annually. The shipments will include dried fruits, legumes, melons, and grapes. The visit also included discussions on tourism and cultural cooperation. The two sides agreed to organize study tours for tourism sector representatives to boost travel exchanges. Cultural ties are also expected to deepen, with plans for performances by the Kashkadarya Regional Theater in Minsk ahead of an upcoming high-level visit. The agreements build on broader economic cooperation between the two countries. Earlier this year, Belarus announced plans to increase bilateral trade with Uzbekistan to $2 billion by 2030. Speaking after talks with Uzbek Prime Minister Abdulla Aripov, Belarusian Prime Minister Aleksandr Turchin described the target as “ambitious but achievable,” noting that trade turnover is already approaching $1 billion.

Economy

Uzbekistan’s Economy to Remain Strong in 2026, IMF Forecasts 6.8% Growth

The International Monetary Fund (IMF) has released its latest assessment of Uzbekistan’s economy, reporting strong growth in 2025 alongside recommendations for continued fiscal discipline and structural reforms. According to the IMF, Uzbekistan’s real GDP grew by 7.7% in 2025, driven by robust domestic consumption and investment. Growth was broad-based, with the services and construction sectors expanding the fastest. At the same time, the unemployment rate declined to 4.8%, down 0.7 percentage points from the previous year. Inflation showed a downward trend, with annual consumer price growth falling to 7.3% by the end of 2025, compared to 9.8% a year earlier. The IMF attributed this to the fading impact of energy price increases introduced in May 2024, a stronger national currency, and what it described as an “appropriately tight monetary policy stance.” Core inflation also declined over the same period. External balances improved. The current account deficit narrowed to 3.9% of GDP, supported by strong exports and remittance inflows. International reserves remained stable, covering around 13 months of imports, while the fiscal deficit fell to 2.1% of GDP, below the government’s 3% target. “The economic outlook remains favorable,” the IMF said, while pointing to increasing global uncertainties, particularly linked to geopolitical tensions and the conflict in the Middle East. Economic growth is projected at 6.8% in 2026, before moderating to around 6% in 2027. Inflation is expected to remain above the Central Bank’s 5% target in 2026, partly due to higher global oil prices, before easing toward the target level in 2027. The IMF stressed that monetary policy should remain focused on price stability, noting that the policy rate has been held at 14% since March 2025. The report also highlighted risks related to global economic conditions, including trade disruptions and commodity price volatility, as well as domestic challenges such as potential pressure for increased public spending and vulnerabilities linked to state-owned enterprises. The IMF recommended limiting additional government spending in 2026 to avoid fuelling inflation. It also called for targeted social support measures instead of broad subsidies, alongside continued reforms in tax policy, public financial management, and state-owned enterprises. Further recommendations included accelerating the privatisation of state-owned banks, strengthening financial sector oversight, and improving governance standards. The IMF also emphasised the importance of maintaining exchange rate flexibility to help the economy absorb external shocks. The findings build on last year’s IMF assessment, which reported 7.6% growth in the first nine months of 2025, also driven by strong consumption and investment, while inflation showed signs of easing.