Uzbekistan’s growth pace is expected to slow in 2023 as demand in the economy cools, especially in private consumption and services, according to a new report from the Asian Development Bank (ADB).
In it Asian Development Outlook (ADO) As of April 2023, the ADB projects Uzbekistan’s gross domestic product (GDP) growth to be 5% in both 2023 and 2024, slightly below last year’s growth of 5.7%. Risks remain in the form of continued sanctions on the Russian Federation and how they could affect foreign demand for Uzbekistan’s exports.
“The Government of Uzbekistan took bold and confident steps to rapidly restore and further develop the economy,” said Enrico Pinali, Officer-in-Charge of the ADB Resident Mission in Uzbekistan.
“Although growth slowed after the robust recovery from the pandemic in 2021, it showed resilience and remained strong.”
The industry is expected to grow by 5.5% in 2023 and 2024, with a modest recovery in the textile, food, mining and quarrying sectors in response to growing demand for hydrocarbons, and high external demand, mainly from the Russian Federation , clothing and processed foods.
Meanwhile, growth in services is expected to slow to 5.5% in both years, as demand for food and accommodation, storage and transport services decline. Growth in private consumption and investment is expected to moderate.
Inflationary pressure is expected to persist, partly due to the continuation of structural reforms and increased social spending. However, average inflation is expected to slow to 11% in 2023 and 10% in 2024 as monetary policy remains tight.
To help contain food inflation, the government has extended import duty exemptions for edible oils, poultry, wheat, flour and rice until the end of 2023.
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The high disbursements foreseen for social protection, education and health will maintain the fiscal deficit. Gross foreign exchange reserves are expected to rise to $37 billion in 2023 and 2024, with gold reserves increasing. Broad money is forecast to rise 25% in both years.
With a population growing at 2% a year, Uzbekistan needs more secondary schools and higher quality education, the report suggests. It is estimated that secondary education, including vocational training centers, will absorb 72.3% of public spending on education in 2022.
To increase school enrollment by an additional 1.2 million students, the government needs to build an estimated 1,961 schools or shorten school days to allow for more double shifts.
The quality of secondary education is cause for concern. Uzbekistan has yet to undertake the International Student Assessment Program to obtain a comparative measure of the quality of its secondary education. To diversify the economy, Uzbekistan needs more skilled labor with knowledge of science, technology, engineering and mathematics (STEM), the report highlights.
Uzbekistan joined the ADB in 1995. Since then, the ADB has provided $10.8 billion in loans, grants and technical assistance to the country.