Uzbekistan Economic Outlook
Annual GDP growth eased slightly in Q4 to 5.7% (Q3: +5.8%), driven by slower expansions in the manufacturing, electricity and gas supply, and hospitality sectors. That said, construction, mining and retail trade expanded at faster paces. Overall in 2022, Uzbekistan enjoyed higher inflows of capital and remittances from Russia amid a stronger ruble compared to the domestic currency. Turning to 2023, economic activity tumbled at the onset of Q1 due to a severe cold spell and gas shortages that caused nationwide power outages. Production in several sectors of the economy declined in January compared to last year’s average, including industrial output, retail sales, construction and services activity. On the external front, exports expanded at a slower rate. In politics, the government is planning a constitution overhaul to extend presidential terms, boding poorly for the modernization agenda.
Inflation was stable at 12.2% in February, remaining well above the Central Bank’s 5.0% target. As core inflation kept rising in January, the Bank left interest rates unchanged at 15.00% on 26 January. In 2023, inflation should ease on weaker external price pressures. Nevertheless, commodity price swings, currency volatility and bad weather denting harvests are risks.