Economic Growth - The Times Of Central Asia

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Economic Growth

President of Uzbekistan Sets Economic Tasks for 2024

On January 16th, President Shavkat Mirziyoyev chaired a government meeting on priority tasks for the country’s economic development in 2024. It was stated that in 2023, economic growth was at 6%, and this year the plan is to maintain growth at the same level and bring gross domestic product to $100 billion. The head of state stated that with an increase in industrial production, the added value of products did not exceed 40%, which is mainly due to dependence on imports, high energy consumption, and excessive production costs. The President ordered that 2024 be a year of efficiency and production cost reduction for leaders of the economic sector and all state-owned enterprises. This year, the task is to increase the added value of domestic products to 45%, reduce production costs by 15%, and ensure industrial growth of 7%. Another source of budget revenue is privatization. However, 484 state assets included in the privatization program have yet to be put up for auction. Therefore, the President ordered the Cabinet of Ministers to prepare a new privatization program which aims to earn $1.6 billion in revenue this year. The meeting emphasized that a pressing issue today is the shadow economy, especially in the services sector, construction, and industry. Mirziyoyev stated that the shadow economy is an obstacle to fair competition, and outlined new measures to combat it. In particular, the powers of the Department for Combating Economic Crimes under the Prosecutor General's Office will be expanded, and a separate department to tackle the shadow economy will be created within the General Prosecutor's Office. Another important issue discussed at the meeting was inflation, which was at 8.77% last year, its lowest level since 2016. This year the plan is to keep inflation below 9%. Issues of lending were also discussed, with the task being set to develop a program to lower bank interest rates on loans by at least 2-3%.

SEZs Economic Growth

New City, Alatau, Established in Kazakhstan

By a decree dated January 9th, President Tokayev ordered that the village of Zhetygen in the Ili district of the Almaty region be classified as a city of regional significance and renamed Alatau. The new city is located 15 km from Almaty, and has a total area of 88,000 hectares and a population of 52, 700. The Ministry of National Economy said that the creation of the new city will allow for the modernization of road networks, engineering and social infrastructure, create new jobs, attract investment and technology, develop entrepreneurial activity, and increase tax revenues. A decision to expand the territory of the local Special Economic Zone (SEZ) from 30,000 to 96,500 hectares and rename the G4 City SEZ to the Alatau SEZ was also approved. As a result, the entire territory of Alatau and part of the nearby city of Konaev are now included within the territory of the SEZ. The SEZ is expected to host more than 170 projects with the creation of 110,000 new jobs, the ministry said. In November 2023, the Alatau project was discussed at a meeting chaired by Prime Minister Alikhan Smailov. According to the plan, the new city should become a magnet for attracting domestic and foreign investments and an international business hub operating to world standards based on the experience of such international business centers as Dubai, Singapore, and Tianjin. The development of Alatau will also facilitate an increase in the level of trade and investment interaction with China and Central Asian countries, launch new production and commercial projects, and introduce best practices in various spheres and industries. For this purpose, conditions and incentives will be provided to attract investments and for doing business in the new city and its SEZ, including tax and customs.

Economic Growth Foreign Investment

Kazakhstan Remains Regional Leader in Attracting Foreign Investment, Says PM

Despite the current global challenges, Kazakhstan remains attractive to foreign investors and is the leader in gross inflow of foreign direct investment in the Central Asian region. Last year, FDI in Kazakhstan grew by 18% and reached $28 billion - a record high for Kazakhstan over the past decade, Prime Minister Alikhan Smailov said in an interview with the 24KZ TV channel. In his words, $13.3 billion was attracted into the country’s economy in the first half of this year, and about $27 billion is expected by the end of the year. Smailov said this was largely possible thanks to the diplomacy of Kazakhstan's President Tokayev, who, in the face of complex geopolitical tensions, is consistently strengthening relations with a wide range of influential players including China, Europe, Russia, the U.S., Turkey, and the Arab world. The Prime Minister also spoke about measures the Government will take to double economic growth in the medium term. “The Government has been given a big task to double the national economy by 2029. In this regard, we will continue to work to stimulate economic activity in the country. We will further reduce inflation and ensure macroeconomic stability,” Smailov said. The Government also has designs on further improving the investment climate. “Every year, we plan to attract at least $25 billion of foreign direct investment. In the future, a nationwide pool of investment projects will be implemented. Thanks to this, more than 160,000 new jobs will be created,” said the Prime Minister. “All this will allow us to ensure economic growth in the medium term at a level of at least 6%. In general, the order of the Head of State to increase the volume of the national economy to $450 billion will be fulfilled,” Smailov concluded.

Economic Growth

Uzbekistan’s Economy Resilient to Global Challenges, Says IMF

According to the IMF in analysis posted on their website, Uzbekistan’s economy has demonstrated remarkable resilience to recent global challenges. Following geopolitical shocks, the economy saw an influx of migrants and a large increase in remittances in 2022, boosting domestic demand. This, coupled with higher external demand, led to real GDP growth of 5.7% in 2022, the head of an International Monetary Fund staff team said in a statement following their visit to Uzbekistan earlier this month. While remittances have fallen this year to the trend prevailing prior to Russia’s war in Ukraine, a sizable fiscal expansion, and high wage and export growth are expected to sustain real GDP growth at 5.7% in 2023. Strong imports and declining remittances will contribute to a higher external current account deficit this year. International reserves are expected to remain ample at eight-and-a-half months of prospective imports. By the end of 2023, the 12-month inflation rate is projected to decline by more than 3% compared to the same period last year, to 9%, helped by a value-added tax rate cut, and lower international food and energy prices. The IMF says the outlook for 2024 remains positive, and while risks remain, growth is projected to remain above 5%. “Preserving macro-financial stability and continuing structural reforms are key to bolstering resilience and sustaining robust economic growth amidst the challenging current global context,” the statement said. Accelerating World Trade Organization negotiations and cooperating with neighboring countries to improve transport routes will reduce transportation costs and open new markets for Uzbekistan’s products, the IMF statement concludes.

Economic Growth

EDB Forecasts Economic Growth for Kazakhstan, Kyrgyzstan and Tajikistan in 2024

The Eurasian Development Bank (EDB) has published its macroeconomic outlook for the Bank’s six member states — Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. Bank analysts anticipate that GDP across the region’s countries will be close to a balanced growth path. Projections indicate a GDP growth in 2024 of 5.7% in Armenia, 2% in Belarus, 5% in Kazakhstan, 4.5% in Kyrgyzstan, 1.5% in Russia, and 7.3% in Tajikistan. According to EDB analysts, following Kazakhstan’s economic growth of 4.8% in 2023, an acceleration in GDP growth is anticipated for 2024, further bolstered by high investment activity. The expected decrease in interest rates is poised to provide an additional impetus. In the medium term, structural transformations are set to improve the quality of economic growth by expanding opportunities in manufacturing and service industries. Economic diversification creates prerequisites for an anticipated acceleration in 2025 and 2026, positioning Kazakhstan as a leader among Eurasian Economic Union member states in terms of growth rates. Strong domestic demand supported high economic activity in Kyrgyzstan and Tajikistan in 2023. EDB analysts project a slight deceleration in these countries in 2024, albeit with GDP growth rates still noticeably higher than the global average.

Transport Economic Growth

ADB to Improve 700 km of Rural Roads in Uzbekistan

ADB to Improve 700 km of Rural Roads in Uzbekistan The Asian Development Bank (ADB) has approved a $240 million loan to improve 700 kilometers of rural roads in Uzbekistan, making them safer and more climate-resilient in order to enhance connectivity and promote rural development, the Bank said on December 11th. “With almost half of double-landlocked Uzbekistan’s population living in rural areas that rely on agriculture as the main source of livelihood, connectivity is critical,” said ADB Director General for Central and West Asia, Yevgeniy Zhukov. “Keeping rural communities connected to markets and services through safe, reliable, and climate-resilient rural roads is essential to achieve inclusive, sustainable economic development.” Aligned with the government’s National Development Strategy 2030 and the Rural Road Strategy 2035, the project marks a key initiative to kickstart the government’s Rural Road Program. It will focus on local and inter-farm rural roads in twelve regions and the Republic of Karakalpakstan. The improvements aim to enhance capacity, quality, connectivity, ensuring safety and climate resilience through reinforced embankments, bridges, culverts, and drainage systems. As a pioneering effort in Uzbekistan and the Commonwealth of Independent States, the project will provide rural communities and farmers with all-weather access to markets, schools, health services, and district centers. “ADB will help strengthen the operational capacity of both the Committee for Roads and local governments for the sustainable maintenance of rural roads,” said ADB Senior Transport Specialist, Yongkeun Oh. “We will support the implementation of a web and GIS-based rural road asset management system to improve decision-making and planning capabilities, leading to more efficient maintenance and resource allocation.” To capitalize on improved access to markets and economic opportunities, the project also aims to empower rural women through training in sustainable agriculture and climate-resilient practices. Community development facilities will be upgraded to provide entrepreneurship and livelihood skills training, alongside campaigns to raise awareness about gender violence and road safety.