EBRD: Uzbekistan's will see 1.5% GDP growth in 2020

In 2019, Uzbekistan’s GDP grew by 5.6 per cent, slightly accelerating from 5.4 per cent in 2018. In Q1 2020, the economy expanded by 4.1 per cent but is likely to contract in Q2 2020 as the impact of containment measures (lasting for at least two months) kicks in, according to the latest report by EBRD.

Exports declined by 11 per cent year-on-year in Q1 2020 despite being much more diversified in terms of products and markets compared to other countries in Central Asia. Commodity exports constituted about 50 per cent of Uzbekistan’s total exports in 2019, with gold accounting for more than a half, providing a natural hedge in turbulent times.

China was Uzbekistan’s largest export market in 2019, but its share in total exports was only 14 per cent (mostly gas). A key vulnerability for Uzbekistan is the rapid expansion in credit to the private sector (up 26 per cent year-on-year in December 2019), increasing the probability of businesses defaulting at a time of a major slowdown in the economy, with negative implications for employment, aggregate demand and stability of the banking system.

Remittances from Russia (accounting for 8 per cent of GDP) are also expected to shrink affecting the most vulnerable parts of the population. In addition, the tourism and hospitality sector (about 6 per cent of GDP), will be among the hardest hit by coronavirus-related disruptions. GDP is still expected to grow in 2020, albeit at a modest 1.5 per cent rate. Much stronger growth performance of 6.5 per cent is expected in 2021, supported by recovery in exports and domestic demand.