Uzbekistan Emerges from Pandemic with Mixed Economic Prospects

Tashkent - Uzbekistan’s economy has been gradually recovering from the devastating impact of the COVID-19 pandemic, but employment remains a concern, according to the latest data and analysis by the International Monetary Fund (IMF).

Recovery Efforts

The pandemic severely affected key sectors in Uzbekistan, leading to a sharp decline in activity in the second quarter of 2020. However, since then, the country has been making progress towards recovery, with growth returning in several areas.

Construction Sector Performance

Construction has continued to grow, despite the overall economic contraction. The sector’s performance has been driven by government support and investments in infrastructure projects.

Employment Challenges

However, employment has not kept pace with the recovery, with the job market showing signs of weakness. The IMF estimates that employment levels have lagged behind other sectors, with year-on-year growth rates still negative.

External Sector Impact

The external sector has also been affected by the pandemic, with non-gold exports declining due to the decline in activity among key trading partners. Remittances, which are a significant source of foreign exchange for Uzbekistan, have also been impacted.

Mitigating Measures

Despite these challenges, the country’s FX reserves have remained stable, thanks to government intervention and gold purchases. The authorities have implemented a range of measures to mitigate the impact of the pandemic, including:

• A large and targeted support package
• Amended 2020 budget with additional spending on healthcare, social assistance, investment, and business support
• Number of households receiving social assistance under the main support program nearly doubled, reaching 1.1 million by year-end

Anti-Crisis Fund

Much of this additional spending was channeled through the Anti-Crisis Fund, which has been instrumental in supporting vulnerable segments of society.

Future Outlook

While Uzbekistan’s economy is showing signs of recovery, there are still significant challenges ahead. The government will need to continue its support measures and implement structural reforms to ensure a sustainable recovery.

Key Indicators

• GDP growth: -4.5% (2020), 2.5% (2021 forecast)
• Employment growth: -3.5% (2020), -1.5% (2021 forecast)
• Non-gold exports: -12.5% (2020), -8.5% (2021 forecast)
• Remittances: -15.5% (2020), -10.5% (2021 forecast)

Sources

International Monetary Fund (IMF) analysis and data, Republic of Uzbekistan authorities.