Economic Growth - The Times Of Central Asia

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Economic Growth

Uzbekistan Raises 2026 Growth Forecast to 8.1%

Uzbekistan has raised its 2026 economic growth forecast from 6.6% to 8.1%, after stronger-than-expected performance last year and in the first quarter of 2026. The Ministry of Economy and Finance’s updated Fiscal Strategy for 2027-2029 projects nominal GDP of 2.183 quadrillion soums this year (about $180 billion). The revision follows growth of 7.7% in 2025, above the original 6.6% forecast, and an 8.7% expansion in the first quarter of 2026. The ministry expects market services to grow by 16.6% in 2026, industrial production by 8%, construction by 12.4%, and agriculture by 5%. Inflation is forecast to slow to 6.5%, while unemployment falls from 4.8% in 2025 to 4.5%. The stronger projection rests partly on domestic demand. The strategy expects non-gold exports to rise by 20%, capital investment by 12.9%, and remittance growth to remain around 10%. Separate Central Bank figures show that remittances rose 13% to $3.8 billion in the first quarter, helping to support household spending even as Russia’s share of transfers declined. Growth is forecast to slow to 6.9% in 2027, before rising to 7.1% in 2028 and 7.4% in 2029. Inflation is projected at 5-6% in 2027 and 5% in 2028 and 2029. The government also intends to keep the fiscal deficit within its rules and public debt below 40% of GDP. The Ministry of Economy and Finance says meeting these targets will require stronger tax administration, fewer ineffective exemptions, tighter oversight of public-private partnerships, and further action against the shadow economy. It also plans more transparent medium-term budgeting and closer scrutiny of fiscal risks. The success of those reforms will determine whether rapid growth can be sustained without weakening public finances. The fiscal strategy uses the IMF’s April global outlook as part of its external assumptions. The government’s estimate is considerably more optimistic than the IMF’s 6.8% forecast. In its June assessment, the Fund said Uzbekistan’s outlook remained favorable but warned that the economy could be running above its potential. It identified weaker global conditions and domestic overheating as the principal risks. The revised figures also strengthen the government’s claim that the Uzbekistan-2030 Strategy target of an economy worth more than $240 billion remains achievable. The plan relies on private investment, export growth, higher productivity, and continued macroeconomic reforms. Economist Otabek Bakirov said the 8.1% projection would mark the strongest growth in Uzbekistan’s recent history. “According to the Fiscal Strategy forecasts, economic growth will accelerate to 8.1% in 2026. If this happens, it will become a new record for the country’s recent history,” he wrote in an analysis of the forecast. In a separate calculation, Bakirov put nominal GDP above $205 billion in 2027, $228 billion in 2028, and $257 billion in 2029. On that path, the $240 billion target would be surpassed a year early. However, he cautioned that the scenario depends on maintaining strong growth, low inflation, and exchange-rate stability, without a major domestic or external crisis. A weaker soum would reduce the dollar value of GDP even if output continued to rise quickly...

Economic Growth

Kazakhstan’s GDP Growth Tops 4% in First Half of 2026 Despite Lower Oil Output

Kazakhstan’s economy expanded by 4.1% in the first half of 2026, driven primarily by strong growth in non-oil sectors despite a decline in crude oil production, according to the Ministry of National Economy, citing data from the Bureau of National Statistics. Economic growth accelerated from 3.7% recorded during the first five months of the year, while manufacturing continued to outperform the broader economy. According to the ministry, real GDP growth reached 4.1% in January-June, even as oil production fell 8.4% compared with the same period last year. “The non-oil sector remains the main driver of growth, expanding by more than 5% during the first half of the year,” the ministry said. “More than 80% of GDP growth came from manufacturing, construction, trade, and transport.” Construction remained the fastest-growing sector, with output increasing 15.2% year on year. Kazakhstan commissioned 8.5 million square meters of housing during the first six months of the year, 6.7% more than during the same period in 2025. Manufacturing output expanded 9.8% during the first half of the year. Total manufacturing production reached $34.1 billion, surpassing mining output of approximately $33.6 billion. Although growth slowed in metallurgy, which accounts for more than 40% of Kazakhstan’s manufacturing sector, other industries posted strong gains. Production of fabricated metal products increased 39.9%, automobile manufacturing rose 31.6%, pharmaceutical output grew 43.6%, chemicals expanded 20.7%, rubber and plastic products increased 21.8%, construction materials rose 14.1%, and food production climbed 14.7%. Other sectors also maintained positive momentum. Trade expanded 5.7%, agriculture grew 4.4%, telecommunications services increased 4.3%, and transport and logistics services rose 7.1%. Growth in transport was supported by a 14% increase in auxiliary transport services, while rail freight volumes rose 4.9% and road freight transportation increased 11.4%. Investment activity also remained robust. Investment in fixed capital increased 9.6% compared with the first half of 2025. The strongest gains were recorded in information and communications, where investment more than doubled, electricity supply at 61.4%, manufacturing at 33.3%, agriculture at 24.6%, and transport at 11.6%. “The dynamic development of non-resource sectors and strong investment activity continue to provide a solid foundation for Kazakhstan’s economic growth,” the ministry said. As previously reported by The Times of Central Asia, Kazakhstan’s GDP could reach $320 billion by the end of 2026, up from $306 billion a year earlier. S&P Global Ratings projects GDP growth of 4.1% in 2026, down from 6.5% in 2025. Kazakhstan’s National Development Plan through 2029 sets a GDP growth target of 6.2% for 2026.

Foreign Investment

Kazakhstan Expands Technology Agenda, Inviting Investors into Space and Artificial Intelligence

Kazakhstan is stepping up its focus on the digital economy and high technology, expanding its investment agenda beyond the resource sector. At a meeting of the Foreign Investors’ Council on July 2, officials presented several areas they see as potential new growth drivers: artificial intelligence, digital infrastructure, space technology, and the innovation hub of Alatau City. For Astana, the push is part of a broader economic development strategy. President Kassym-Jomart Tokayev said Kazakhstan’s economy grew by 6.5% in 2025, while GDP has exceeded $300 billion. According to Tokayev, accumulated net foreign direct investment has surpassed $150 billion, making Kazakhstan Central Asia’s largest recipient of foreign investment. Against this backdrop, the government is increasingly focused on the next stage of development: building digital industries that could help shape the region’s economic architecture in the coming years. Artificial intelligence is central to this strategy. Tokayev described AI as one of the key drivers of the global economy and confirmed that 2026 has been declared the Year of Artificial Intelligence and Digital Development in Kazakhstan. The country has adopted a new package of sector-specific legislation, including the Digital Code and the Law on Artificial Intelligence, and has created the Ministry of Artificial Intelligence and Digital Development. One of the most prominent projects in this sector is Data Center Valley, an infrastructure cluster intended to host large-scale computing and data-processing facilities. According to the president, the project has already attracted interest from Amazon, G42, and other international technology companies. For Kazakhstan, the development of data centers has strategic importance. As global demand for computing power and AI infrastructure grows, countries with access to energy, favorable logistics, and clear regulation are becoming increasingly attractive destinations for international capital. A separate part of the strategy focuses on the space sector. Deputy Prime Minister and Minister of Artificial Intelligence and Digital Development Zhaslan Madiyev invited foreign investors to participate in building a joint space ecosystem. According to Madiyev, Kazakhstan sees the sector as broader than traditional satellite infrastructure, viewing it as a technological platform that can combine spacecraft manufacturing, launches, maintenance, Earth observation, and AI-driven analytics. This approach reflects a wider global trend. The space technology market is entering a new phase of growth, driven by private investment, satellite communications, geo-analytics, and big data services. For Kazakhstan, this creates an opportunity to use its accumulated expertise and infrastructure, including its space-sector legacy at Baikonur, which remains leased to Russia until 2050. Another pillar of the digital strategy is Alatau City, an innovation hub being built near Almaty. The authorities view it as an experimental platform for digital assets, fintech, autonomous transport, and artificial intelligence technologies. According to Madiyev, Alatau City is expected to become one of the first sites in the region for testing autonomous vehicles, drones, and tokenized solutions. Tokayev said the city will be built on a “digital by default” principle, meaning that administrative and public services will be designed in digital form from the outset. The Times of Central Asia previously reported that Astana...

Investor Perception

Foreign Investors Remain Interested in Central Asia Despite Volatility, Survey Finds

International investors continue to view Central Asia and the Caucasus as attractive destinations despite heightened geopolitical tensions and market volatility, according to the third annual Investor Perception Report released by Montfort Eurasia. The survey, conducted among institutional investors in the United Kingdom and the United States, found that interest in the region remains high. Overall, 66.3% of respondents reported either strong or moderate interest in investing in Central Asia and the Caucasus, suggesting that the region is increasingly being considered as part of broader emerging-market strategies rather than as a niche destination. Among UK investors, 67.1% expressed strong or moderate interest, while the figure stood at 65.5% in the U.S. Around one-third of respondents in both countries reported very strong interest in the region, with 32.8% in the UK and 34.6% in the U.S. Recent U.S. commercial engagement in Central Asia has also moved from dialogue toward specific deals. The Montfort Eurasia report suggests that investor attitudes have shifted over the past three years. While early interest was driven largely by curiosity, investors are now approaching the region with more detailed financial analysis and due diligence. “Two years ago, the challenge for Central Asia and the Caucasus was getting noticed. Today it is being understood,” said Eleanor Kramers, managing director of Montfort Eurasia. “Investors have arrived and they have arrived as analysts, reaching for financial data and due diligence ahead of headlines. The region has answered their early interest with proof rather than promise, from international listings to sovereign-rating upgrades. The opportunity now is to meet a more serious, more demanding audience with the depth and consistency of information it expects.” One of the clearest signs of that shift is where investors obtain information. Financial analysis has overtaken international news media as the leading source of intelligence about the region, cited by 68.6% of UK respondents and 56.6% of U.S. respondents. According to the report, investors are increasingly evaluating the region through company performance, financial statements, and sector data rather than through media coverage alone. Although interest remains high, the report found that investors’ knowledge of the region has stopped improving. Respondents rated their understanding at 6.63 out of 10 in the UK and 6.79 out of 10 in the U.S., slightly below last year’s peak. Factual awareness also weakened. Only 29% of UK investors correctly estimated trade volumes between the UK and the region, compared with 39% a year earlier, while roughly one-quarter of respondents in both countries could not identify the region’s most business-friendly country. Political and economic risks also remain key considerations. Investment security ranked as investors’ biggest concern, cited by 72.3% of UK respondents and 64.7% of U.S. respondents. Political stability followed closely behind, with 56.2% of UK investors and 52.9% of U.S. investors identifying it as a major factor. Among British respondents, improved political stability was the most frequently cited condition for increasing investment in the region.

Investment Project Implementation

Uzbekistan Pushes to Turn $43 Billion in Investment Deals into Economic Growth

President Shavkat Mirziyoyev has instructed officials to accelerate the implementation of investment agreements signed during the 5th Tashkent International Investment Forum, stressing that every deal must deliver tangible economic results rather than remain on paper. Speaking at a government meeting on June 25, Mirziyoyev said the forum resulted in 177 agreements worth $43 billion with foreign partners. He added that each agreement should be transformed into concrete projects that create jobs and generate higher added value. “Every agreement must become a project, a workplace, and a source of high added value,” the president said. Officials were ordered to prepare decisions addressing 120 proposals submitted by foreign investors during the forum. Mirziyoyev also called on ministers and regional governors to rethink their approach to investment, placing greater emphasis on quality and efficiency. According to the president, half of all investment attracted to Uzbekistan over the past five years has gone to just four regions, but economic returns differ sharply. In Fergana, he said, every UZS 1 million invested generates an additional UZS 273,000 ($22.78) in gross regional product. In Samarkand, the figure is UZS 262,000. In Bukhara, it is UZS 117,000 ($9.76), roughly half the return in stronger-performing regions. The meeting also focused on the growing demand for construction materials driven by Uzbekistan’s ambitious development plans. Earlier this year, the government adopted a long-term housing program aiming to double the number of new homes built annually to 280,000 by 2040 and increase the number of “New Uzbekistan” residential districts from 61 to 120. In addition, Uzbekistan is commissioning 20 to 25 million square meters of commercial buildings every year, creating annual demand for at least $10 billion worth of construction materials. During the investment forum, the government also presented $27 billion in new infrastructure projects to international investors. These include a nuclear power plant in Jizzakh, a fourth copper processing plant in Tashkent Region, New Tashkent Airport with an annual capacity of 20 million passengers, a 55,000-seat stadium in New Tashkent, and a 282-kilometer highway linking Tashkent and Samarkand. Mirziyoyev said these large-scale projects require construction materials that meet strict international standards and instructed officials to establish a new system linking domestic manufacturers with major investment projects. The president also ordered the government to prepare proposals ensuring equal conditions for imported and locally produced construction materials. While foreign investors have requested value-added tax exemptions for imported materials used in major projects, domestic manufacturers argue that the same incentives should apply to local products, saying they are ready to compete on quality and standards. The meeting also addressed financial difficulties in the construction materials sector. According to officials, 457 companies have accumulated 3.5 trillion soums ($292,101,250) in overdue loans because their products remain too expensive or fail to meet current market demand. To help revive the sector, Mirziyoyev ordered officials to develop recovery plans for each company and allocate $50 million to modernize production facilities, reduce manufacturing costs, and support the production of more competitive goods.

International Monetary Fund

IMF Growth Forecast for Uzbekistan Warns of Inflation and Global Risks

Uzbekistan’s economy performed strongly in 2025, with the International Monetary Fund (IMF) reporting growth across sectors. Inflation fell and the fiscal deficit narrowed. The Fund urged policymakers to keep monetary policy tight and continue reforms as geopolitical tensions and global uncertainty add risks. Uzbekistan’s real GDP expanded by 7.7% in 2025, driven by strong domestic consumption and investment. The unemployment rate fell by 0.7 percentage points from the previous year to 4.8%. Growth was supported by rapid expansion in services and construction. Consumer price inflation declined from 9.8% at the end of 2024 to 7.3% at the end of 2025. The IMF attributed the improvement to the fading impact of energy price increases introduced in 2024 and the appreciation of the Uzbek som against the U.S. dollar. Tight monetary policy by the Central Bank also helped bring down inflation. Core inflation declined during the year. External balances improved as the current account deficit narrowed to 3.9% of GDP. Strong exports and remittance inflows supported the decline. High commodity prices also helped. International reserves remained at comfortable levels, equivalent to around 13 months of imports. The fiscal deficit fell to 2.1% of GDP, below the government’s target of 3%. The IMF expects economic growth to remain resilient in 2026, forecasting GDP growth of 6.8%. Continued reforms and investment are expected to support activity. Remittances and elevated gold prices should also help sustain growth. The Fund projects growth will moderate to around 6% in 2027 as domestic demand gradually slows. Despite the positive outlook, risks have increased because of the conflict in the Middle East and its potential impact on the global economy. Uzbekistan has limited direct trade and remittance links with countries affected by the conflict. However, higher oil prices and trade disruptions could affect the country indirectly through key trading partners. Weaker global growth could add further pressure. The IMF warned that inflation is likely to remain above the Central Bank’s 5% target in 2026. Higher global oil prices, combined with strong domestic demand, could slow disinflation. The Fund recommended that the Central Bank keep its policy rate at a restrictive level and tighten monetary policy further if inflationary pressures persist. The Fund advised the government to avoid spending increases beyond those already planned in the budget. Any support measures linked to the Middle East conflict should be temporary and targeted toward vulnerable groups, rather than broad subsidies or price controls. The IMF called for faster privatization of state-owned commercial banks and enterprises. It also recommended stronger corporate governance and continued work to improve fiscal transparency and debt management. The Fund highlighted labor market challenges, including low female labor force participation and skills mismatches. High levels of informal employment remain another concern. Further progress in governance reform and competition policy could help attract additional private investment. The IMF said Uzbekistan’s commitments linked to accession to the World Trade Organization could also support long-term economic growth. The country enters 2026 from a position of economic strength, but maintaining stability and continuing...