Uzbekistan is among the five fastest growing economies in the world with GDP growth surging to 8% in 2015. Will structural reforms enable the Uzbekistan economy to double its GDP by 2030?
The recent annual report of President Karimov of Uzbekistan focused on the results of the country’s socio-economic development in 2015 and priorities for the coming year. Uzbekistan continues to demonstrate consistently positive and high macroeconomic indicators, remarkable amidst a slowing global economy and the challenges facing China.
Special attention was drawn to forecasts by the Head of State concerning the doubling of Uzbekistan’s GDP by 2030. Long-term forecasts, amid growing instability and uncertainty in global markets, is an indication that the state is carrying out far-sighted economic strategies based on the principles of sustainable development. Few developing countries can afford or claim such large-scale modernisation together with diversification of the economy, the introduction of innovative technologies and the development of renewable energy resources.
Despite its ambitious targets, Uzbekistan shows positive signs that it will be able to realise its economic and social goals. According to a report by the World Economic Forum, Uzbekistan is among the five fastest growing economies in the world, based on earlier development outcomes and forecasts for 2016-2017. Uzbekistan’s GDP grew by 8% in 2015. Consistent with in-depth analysis of trends in the global economy and a realistic assessment of Uzbekistan’s resources and opportunities, it would appear Uzbekistan is on course to achieve its aim to double GDP. In addition, the plan is to reduce by half reliance on fossil fuels and energy intensiveness as a result of the widespread introduction of renewable energy and modern energy saving technologies.
Uzbekistan is also in the process of completing significant structural reforms which go a long way to liberalising and enhancing the business and trading environment. A programme to decrease the presence of the State in the economy together with systemic measures providing radical change in ownership structure, privatisation, and national principles and approaches to corporate governance has been successfully realised. Modern management structures have been introduced in all joint stock companies. These measures have had a beneficial effect. The share of small business in gross domestic product has increased to 56,7%, 1.8 times greater when compared to 2000.
The efforts of the Government to broaden the process of privatisation by reducing state presence in the economy through the sale of state shares in joint stock companies to the private sector will have an undoubted favourable impact. The emphasis being placed on achieving international standards of corporate governance should be beneficial for attracting foreign investment. This speaks well for the future development for Uzbekistan in the coming years.
A key sector for Uzbekistan is the production of cotton. The volume of raw cotton production is set to gradually reduce from 3.35 million tons to 3 million tons by 2020. Calculations show that this amount of raw cotton will allow on the one hand to fully satisfy demand, particularly for textile and light industry in raw materials, and on the other hand to maintain Uzbekistan’s position as a supplier of cotton fibre and its derivatives on the world markets.
To counter the projected fall in cotton production Uzbekistan has embarked on a programme designed to release cultivated land away from cotton production towards vegetable crops including potatoes, fodder production, oil producing plants, gardens and vineyards. This will result in the optimisation of cultivated areas and the introduction of modern agricultural technologies. By 2020 the country plans to have sustainable production of cereals amounting to 8.5 million tons with a growth of 16.4%.
Overall Uzbekistan is focused on the implementation of effective measures and investment in structural transformation, together with rapid modernisation and technological development. This is being underpinned by total investment of $15.8 billion, representing an increase of 9.5% over 2014. Of this, over $3.3 billion or 21% of total investments was derived from foreign investment.
The country has a sizable consumer market, and rich natural resources in a promising geo-economic location. Opportunities presented to the international business community would appear hard to match in today’s challenging environment. Uzbekistan represents therefore an attractive destination for multinational companies.