The World Bank has released its latest Country Economic Memorandum for Uzbekistan, examining the country's economic developments from 2010 to 2022. The report outlines the progress made in economic reforms and identifies challenges that need addressing to boost domestic growth and the private sector.
The memorandum highlights several key challenges faced by Uzbekistan. From 2010 to 2022, the country achieved an average annual per capita growth rate of 4.2%, outperforming regional averages in Europe and Central Asia as well as those of lower-middle-income countries. Despite this growth, employment levels did not meet expectations between 2017 and 2022, though there was improvement in subsequent years. To achieve upper-middle-income status by 2030, Uzbekistan must aim for near double-digit growth rates and focus on increasing total factor productivity by removing regulatory barriers and improving trade integration.
In 2020, Uzbekistan had over 2,000 state-owned enterprises (SOEs), with revenues accounting for about a third of GDP. Many of these SOEs operate in sectors where private firms could be more competitive. Additionally, infrastructure modernization is needed across provinces to reduce business costs and improve connectivity, particularly in electricity and transportation.
Trade has seen some expansion with the trade-to-GDP ratio doubling since 2017 to reach 71.6% in 2022; however, only a small percentage of firms are currently exporting their goods.
The World Bank's report offers several recommendations for overcoming these challenges:
1. Enhancing infrastructure efficiency by prioritizing investments in regions with high manufacturing productivity.
2. Supporting private sector growth through accelerated privatization of SOEs and improved access to finance for SMEs.
3. Promoting competition by reducing regulatory burdens and establishing independent regulators for key industries.
4. Increasing trade openness by removing tariffs on essential imports and expanding preferential trade agreements.
By implementing these strategies, the memorandum suggests that Uzbekistan can sustain high growth rates, create quality jobs, and increase its competitiveness globally.