Impact of COVID-19 on the Uzbek economy
The Uzbek economy is projected to grow by 1.5% in 2020 – before the COVID-19 crisis, an increase of 6% had been expected. The lower figure results from lower growth in consumption and investment as well as in services and industry. Agriculture is almost unaffected by the crisis.
Exports and imports will fall significantly in 2020; gold exports, on the other hand, will continue to rise strongly. The current account deficit will reach 9.6% of GDP, a high figure, which, in addition to the decline in exports, is caused by lower remittances. Despite very high reserves of USD 31.3 bn, financing the deficit by IFIs is recommended.
Inflation is set to reach 12.9% and thus be slightly lower than expected before the pandemic. The Sum depreciated slightly by 6% vs the US dollar in Jan-May. The budget deficit will rise to a relatively high 5.6% of GDP in 2020 due to higher spending and lower revenues. International donors are expected to finance a large part of the deficit. The debt level is expected to reach 34.5% of GDP, thus remaining moderate despite the high deficit.
All in all, the Uzbek economy will grow despite the pandemic and is therefore in a better position than most other countries. For 2021 strong economic growth of 7% is forecast.