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NEWS

EBRD: Uzbekistan’s economy will grow 4.5% in 2021

www.uzdaily.com/en
1 October 2020

In 2021, Uzbekistan’s economy will grow by 4.5% due to the recovery of exports and domestic demand, the European Bank for Reconstruction and Development (EBRD) said in a report.

“Economic growth in Uzbekistan slowed to 0.2% year-on-year in the first half of 2020, remaining positive mainly due to growth in agriculture and construction (2.8% and 7.3% year-on-year, respectively),” - notes the bank.

In other sectors, there has been a decline. Industry and gas production decreased by 1.9% and 17.1%, respectively. The service sector was also hit, with hospitality and retail declining 1.1% year on year; transportation and storage, information and communications decreased by 3.2%, the EBRD said in a report.

The government introduced quarantine measures in mid-March 2020, gradually easing them from the end of August 2020. Unemployment rose to 13.2% in January-July 2020 from 9.1% a year earlier, while real incomes fell 1.7%. Amid sluggish demand, inflation fell from 16.5% year-on-year in August 2019 to 11.7% in August 2020, forcing the central bank to cut the refinancing rate from 15% to 14% annually.

In April 2020, the government established the Anti-Crisis Fund (about 1.5% of GDP) to strengthen the health care system and support vulnerable workers and affected businesses. However, the country is under strong external pressure. While imports fell by about 18% in the first seven months of 2020 (year on year), exports fell 21%.

The external balance worsened further due to the slowdown in economic activity in Russia and Kazakhstan and a 7% annualized decline in remittances (in dollar terms) in the first seven months of 2020.

According to the forecast of the EBRD specialists, in general, in 2020 the real GDP contraction is forecasted at the level of 2.0%. Growth is expected to be 4.5% in 2021, driven by a rebound in exports and domestic demand.