Economic growth reaches pre-crisis level
After growing by only 1.6% last year due to the pandemic, the Uzbek economy is expected to return to strong growth of 5.0% in 2021. The pick-up in economic output is reflected above all in a significant increase in investment and services. Exports also grew strongly by 12% in the first half of 2021, and imports by as much as 15%. Likewise, remittances show a significant increase of 37% compared to 2020.
Other indicators also paint a positive picture: inflation is expected to fall below 10% by the end of 2021, the exchange rate has remained largely stable against the U.S. dollar so far in 2021, and the very high currency reserves of USD 35.5 bn provide a solid buffer against potential further shocks. The fiscal deficit was much lower than expected at 4.4% of GDP in 2020. A deficit of 5.5% is expected for 2021, which is justified by increased investment and does not jeopardise fiscal sustainability.
At the same time, near-term growth prospects depend on the recovery of trading partners’ economies, infection dynamics and ultimately the pace of Uzbekistan’s vaccination campaign.