World Bank Urges Uzbekistan to Deepen Reforms to Sustain Growth and Empower Private Sector
Uzbekistan has made significant progress on economic reforms since 2017, but more decisive action is needed to sustain high growth rates and foster a dynamic private sector, according to the World Bank’s latest Country Economic Memorandum. The report, which analyzes the country's economic trajectory from 2010 to 2022, outlines key policy recommendations for the coming years. Between 2010 and 2022, Uzbekistan’s per capita GDP grew at an average annual rate of 4.2%, outpacing the regional averages for Europe and Central Asia and for lower-middle-income countries. However, the World Bank notes that this growth has been driven largely by capital accumulation rather than productivity gains, while the private sector remains underdeveloped. “To become an upper-middle-income country by 2030, Uzbekistan needs to boost its growth closer to double digits,” the report states. Achieving this requires sharp improvements in total factor productivity, which hinges on reducing regulatory and market distortions, deepening trade integration, and investing in human capital. State Role and Infrastructure Gaps State-owned enterprises (SOEs) still dominate many sectors of the economy. As of 2020, over 2,000 SOEs accounted for revenues equivalent to 32% of GDP. Many of these operate in areas where private firms could be more efficient. The report recommends accelerating privatization, particularly in competitive sectors, and enhancing transparency in the process. Infrastructure remains a major bottleneck to sustainable growth. While Uzbekistan has taken steps to attract private investment, especially in the energy sector, greater efforts are needed. The World Bank urges targeted investment in electricity and transport infrastructure, prioritizing economically strategic regions such as Tashkent and Qarshi, and improving connectivity between hubs like Samarkand, Navoi, and Khorezm. Trade and Regulation Since 2017, Uzbekistan’s trade-to-GDP ratio has more than doubled, reaching 71.6% in 2022. Still, only 6% of domestic firms are engaged in exporting. To capitalize on its growing trade openness, the report calls for further tariff reductions, streamlined customs processes, and modernized logistics and transport networks. To foster a more competitive business environment, the World Bank recommends comprehensive regulatory reforms. This includes establishing independent regulators in sectors such as energy, rail transport, and telecommunications, and enhancing the mandate of the Competition Promotion and Consumer Protection Committee. If implemented, these reforms could help Uzbekistan accelerate its economic transformation, create more jobs, and strengthen its position in the global economy.
