Uzbekistan’s exports remained weak in the first half of 2015 due to historically low global prices for the country’s natural gas, gold, copper, and cotton exports, and to slowdowns in the country’s key trading partners, although economic growth and inflation forecasts are left unchanged.
|Selected economic indicators (%)||2015||2016|
|ADO 2015||Update||ADO 2015||Update|
|Current Account Balance (share of GDP)||0.9||0.9||1.1||1.1|
Source: ADB estimates.
According to government sources, Uzbekistan’s economy grew by 8.1% in the first half of 2015, the same rate as in the first 6 months of 2014. On the supply side, growth was driven by gains of 8.1% for industry and 13.1% for services. Higher production of construction materials and double-digit growth in light industry boosted total industrial output, while buoyant commercial bank lending and strong demand for information technology spurred growth in services. Agriculture grew by 6.5%, slightly below the 6.9% recorded in 2014, despite unfavorable weather.
On the demand side, investment was the main source of growth in the first half, with gross fixed capital formation estimated to have risen by 9.8% over the same period of 2014, as the government continued its development programs. Based on first quarter data, the contribution of net exports to growth is estimated to have declined as external demand remains weak and economic difficulties affect major trading partners.
The government announced an external trade surplus of only $83.4 million in the first half of 2015, or 82% below the $482.1 million trade surplus reported a year earlier. Cumulative trade with Kazakhstan, the Republic of Korea, and the Russian Federation declined by 18% from the same period in 2014. At the same time, trade with the People’s Republic of China grew by around 36% year on year, presumably on energy exports. Imports of goods and services declined by 6% from the same period in 2014, mainly because of lower global prices and tighter import controls.
As developments broadly correspond to forecasts made in the Asian Development Outlook (ADO) 2015, projected growth rates for 2015 and 2016 are confirmed.
The government reported average monthly inflation in the first half of 2015 at 0.4%, or 4.9% on an annualized basis, which is well within the monetary authority’s target range. The trends influencing the consumer price index remain as described in ADO 2015: higher government spending and continued depreciation of the local currency partly offset by lower import costs. Inflation and current account forecasts for 2015 and 2016 are unchanged.
Excerpted from the Asian Development Outlook 2015 Update.