The World Bank has released a report examining Uzbekistan's services sector, focusing on its development challenges and opportunities. The report suggests reforms to modernize the sector, enhance productivity, create jobs, and attract investment.
In 2023, the services sector contributed 43.9% to Uzbekistan's GDP, surpassing industry (23.5%), agriculture (20.6%), and construction (7.1%). Since independence, employment in services has risen from 37% in 1991 to 50% in 2022, compensating for declines in agriculture.
Market reforms since 2017 have driven economic growth with an average annual GDP growth rate of around 5.5%. However, structural transformation has slowed down. From 2010 to 2022, the services sector’s GDP share increased slightly from 41% to 44%, while employment stabilized at 50%.
To sustain growth, Uzbekistan should focus on developing knowledge-intensive global innovator services like ICT and professional services such as consulting and legal sectors. These are over twice as productive as manufacturing but currently account for just 4% of all service jobs.
The report identifies several challenges facing the services sector:
- "Around 60% of jobs are in low-skilled areas like retail and transportation," limiting productivity.
- Global innovator services remain underdeveloped due to barriers such as poor connectivity and contestability issues.
- "Uzbekistan ranks 88th in the World Bank’s 2023 Logistics Performance Index," indicating a need for improved physical and digital connectivity.
- State monopolies dominate telecommunications and transportation sectors.
- Tertiary education enrollment is only at "31.5%, far below the regional average."
To address these issues, the World Bank recommends:
- Increasing investments in infrastructure like roads and broadband.
- Improving logistics efficiency through streamlined customs systems.
- Liberalizing markets by reducing state monopolies.
- Expanding tertiary education access with programs like "One Million Uzbek Coders."
Reforms could significantly benefit Uzbekistan economically:
- "Regulatory reforms in services trade could boost Uzbekistan’s real GDP by up to 17%."
- Substantial expansions are projected for finance (23%), communication (39%), and insurance (45%) subsectors.
Uzbekistan's potential accession to the WTO offers an opportunity to align its services sector with global standards. The accession process could enhance connectivity and contestability while attracting investment.
The report was prepared with financial assistance from various international bodies including Austria, Norway, the United States government, and the European Commission.