IMF Positive on Uzbekistan’s Progress

The International Monetary Fund held consultations with the authorities of Uzbekistan in Tashkent from April 23 to May 7, 2024. According to the results of the discussions, the organization delivered their official statement regarding the mission on May 14. According to the statement, the rate of growth of Uzbekistan’s economy remains high. Although the volume of remittances has returned to the trend of the period until 2022, the implementation of stimulative fiscal policies, a sharp increase in fixed capital investment and private consumption served to increase GDP in real terms by 6% in 2023. In the first quarter of 2024, the growth rate remained high. Steady growth in real incomes and measures to expand the scope of the social protection system since 2020 helped reduce the poverty rate from 17% in 2021 to 11% in 2023. Headline inflation fell from 12.3% at the end of 2022 to 8% in March 2024 due to a relatively high real base rate and lower global food and energy prices. In 2023, the external current account deficit expanded to 8.6% of GDP from 3.5% in 2022. This increase was driven by a surge in imports of machinery and equipment (some of which is temporary), lower remittances compared to 2022, higher net interest payments on foreign debt, and repatriation of earnings by foreign-owned businesses. Despite buoyant gold exports, international reserves decreased by $1.2 billion in 2023, although they remain substantial, equivalent to about nine months of imports as of March 2024. The authorities’ strong reform efforts in energy, privatization, and state-owned enterprises (SOEs) continue to bolster economic prospects. Real GDP growth is expected to be robust at 5.4% in 2024, supported by strong domestic demand, and is projected to edge up to 5.5% in 2025. Ongoing fiscal adjustments, moderate bank lending growth, and the reversal of temporary import increases in 2023 are set to curb import growth and reduce the current account deficit this year and next. Inflation is expected to temporarily rise by the end of 2024 due to higher administered energy prices, but sustained tight macroeconomic and macro-prudential policies, alongside structural reforms, aim to lower it toward the Central Bank of Uzbekistan’s target. However, risks remain elevated given the highly uncertain external environment. External risks include spillovers from an escalation of Russia’s conflict in Ukraine, commodity price volatility, and a sudden global economic downturn. Domestically, risks involve slower fiscal consolidation, weakened bank balance sheets, and potential liabilities from state banks, SOEs, and public-private partnerships (PPPs). Upside risks include acceleration of structural reforms, continued favorable inflows of income and capital, and higher gold prices. The authorities aim to join the World Trade Organization, which, along with enhanced trade cooperation and improved transport routes, would boost Uzbekistan’s exports. Closing gender gaps in labor force participation would increase inclusion, productivity, and GDP. Climate adaptation policies and incentives for green technology would mitigate vulnerabilities, de-carbonize the economy, and promote green growth. “The government should maintain momentum on anti-corruption efforts, building on sustained and significant improvements in governance...

Kazakhstan’s GDP Poised for a 36.8% Boost by 2028

Kazakhstan, the largest landlocked country in the world, has emerged as a regional economic powerhouse in Central Asia, according to the International Monetary Fund's (IMF) World Economic Outlook. The report anticipates that by 2028, Kazakhstan's GDP will surge to $354.7 billion, marking an impressive growth of 36.8%, or a rise of $95.4 billion, compared to its position in 2023. This projection underscores the resilient performance of Kazakhstan's economy, which has been steadily improving over the years. As of 2023, the country's real GDP growth was reported at an annual rate of 4.6%, with total GDP standing at $259.29 billion. Moreover, despite global economic challenges, Kazakhstan's economy grew by 5.1% in the first half of 2023, bolstered by robust exports and fiscal stimulus. However, the IMF cautions that the economic growth is expected to moderate to 3.1 percent in 2024 due to an uncertain economic environment. Despite this prediction, the resilience showcased by Kazakhstan's economy in the face of global disruptions suggests a strong capacity to navigate through potential economic hurdles. The country's economic success can be attributed to several factors. Primarily, Kazakhstan has effectively utilized its abundant natural resources, including significant oil reserves, to fuel its economic growth. Furthermore, the government's commitment to implementing progressive economic policies and fostering a conducive environment for foreign investment has also significantly contributed to the country's robust GDP growth. On December 4, President Tokayev signed a decree with measures to attract investment into Kazakhstan’s economy and accelerate economic growth.  Tokayev’s agenda of creating a “Just and Fair” state has involved tackling corruption and stabilizing the country through sweeping democratic reforms. Looking ahead, the predicted growth of Kazakhstan's GDP to $354.7 billion by 2028 presents an optimistic outlook for the nation and the region. This projection underlines the potential of Kazakhstan's economy and reaffirms its role as a key player in the economic landscape of Central Asia and the Commonwealth of Independent States. While the journey towards this ambitious goal will undoubtedly present challenges, the progress made by Kazakhstan thus far provides a solid foundation for continued economic growth and prosperity.