Growth rose marginally to 8.1% as increased lending and public outlays offset the impact of a weakening economy in the Russian Federation. Recession there and sluggish external demand are projected to slow Uzbekistan’s growth to 7.0% in 2015 before it edges back up to 7.2% in 2016 as the external outlook improves. Inflation is projected to reach 9.5% in 2015 and 10.0% in 2016, with the current account showing surpluses of 0.9% and then 1.1% of the gross domestic product.
|Selected Economic Indicators (%) - Uzbekistan||2015||2016|
|Current Account Balance (share of GDP)||0.9||1.1|
Source: ADB estimates.
The Uzbekistan government reported growth at 8.1% in 2014, slightly above 8.0% in the previous year. Lower growth was expected because of the economic slowdown in the Russian Federation, Uzbekistan’s largest trade partner and its major source of remittances. The slowdown there reduced bilateral trade and remittances, while lower export earnings accelerated the depreciation of the Uzbek sum against the United States dollar. In response, the government expanded public spending and commercial lending to sustain domestic demand.
Growth in gross domestic product is forecast at 7.0% in 2015 and 7.2% in 2016, reflecting projected contraction of at least 3.0% in the Russian Federation and historically low international commodity prices. To limit the growth slowdown, the government is expected to boost spending further, particularly for public investment. Gradual recovery in external demand should begin in 2016, but industry will remain the key supply-side driver of growth, with output supported by higher lending. Large industrial enterprises in strategic sectors - mining, oil and gas, and manufacturing - are expected to receive the bulk of additional lending from both the government and commercial banks. Planned wage and pension increases that exceed the inflation rate should support private consumption and demand for services. Agriculture is projected to grow by 6.0% in line with stable production of the key agricultural crops: cotton and wheat.
Excerpted from the Asian Development Outlook 2015.