Uzbekistan
Economy

Uzbekistan mines 80 tons of gold annually, seventh in the world. Uzbekistan's copper deposits rank tenth in the world and its uranium deposits twelfth. The country's uranium production ranks seventh globally. The Uzbek national gas company, Uzbekneftegaz, ranks 11th in the world in natural gas production with an annual output of 60 to 70 billion cubic metres (2.1–2.5 trillion cubic feet). The country has significant untapped reserves of oil and gas: there are 194 deposits of hydrocarbons in Uzbekistan, including 98 condensate and natural gas deposits and 96 gas condensate deposits.

Uzbekistan improved marginally in the 2020 Ease of Doing Business ranking by the World Bank. The largest corporations involved in Uzbekistan's energy sector are the China National Petroleum Corporation (CNPC), Petronas, the Korea National Oil Corporation, Gazprom, Lukoil, and Uzbekneftegaz.

Along with many Commonwealth of Independent States or CIS economies, Uzbekistan's economy declined during the first years of transition and then recovered after 1995, as the cumulative effect of policy reforms began to be felt. It has shown robust growth, rising by 4% per year between 1998 and 2003 and accelerating thereafter to 7%–8% per year. According to IMF estimates, the GDP in 2008 will be almost double its value in 1995 (in constant prices). Since 2003, annual inflation rates varied, reaching almost 40% in 2010 and less than 20% in 2019.

Uzbekistan has a GNI per capita of US$2,020 in current dollars in 2018, giving a PPP equivalent of US$7,230. Economic production is concentrated in commodities. In 2011, Uzbekistan was the world's seventh-largest producer and fifth-largest exporter of cotton as well as the seventh-largest world producer of gold. It is also a regionally significant producer of natural gas, coal, copper, oil, silver and uranium.

Agriculture employs 27% of Uzbekistan's labour force and contributes 17.4% of its GDP (2012 data). Cultivable land is 4.4 million hectares, or about 10% of Uzbekistan's total area. While official unemployment is very low, underemployment – especially in rural areas – is estimated to be at least 20%. Cotton production in Uzbekistan is important to the national economy of the country. Uzbek cotton is even used to make banknotes in South Korea. Uzbek cotton exports have become the cause of a scandal related to the Russian-Ukrainian war and sanctions imposed on the Russian military industry. According to the Organized Crime and Corruption Reporting Project (OCCRP), Vlast, and iStories, after 24 February 2022, Uzbekistan significantly increased its exports of cotton pulp and nitrocellulose to Russia, key components for the manufacture of explosives and gunpowder. According to Ekonomichna Pravda, at least two large Uzbek exporters have been working with Russian military-industrial complex enterprises. Documents from the Federal Tax Service of the Russian Federation confirm that at least three Russian companies - Bina Group, Khimtrade, and Lenakhim - sold imported cotton pulp in Russia to military plants under US sanctions.

The country has a considerable production of carrots as well. The use of child labour in Uzbekistan has led several companies, including Tesco, C&A, Marks & Spencer, Gap, and H&M, to boycott Uzbek cotton.

Facing a multitude of economic challenges upon acquiring independence, the government adopted an evolutionary reform strategy, with an emphasis on state control, reduction of imports and self-sufficiency in energy. Since 1994, the state-controlled media have repeatedly proclaimed the success of this "Uzbekistan Economic Model" and suggested that it is a unique example of a smooth transition to the market economy while avoiding shock, pauperism and stagnation. As of 2019, Uzbekistan's economy is one of the most diversified in Central Asia which makes the country an attractive economic partner for China.

The gradualist reform strategy has involved postponing significant macroeconomic and structural reforms. The state in the hands of the bureaucracy has remained a dominant influence in the economy. Corruption permeates the society and grows more rampant over time: Uzbekistan's 2005 Corruption Perception Index was 137 out of 159 countries, whereas in 2007 Uzbekistan was 175th out of 179 countries. A February 2006 report on the country by the International Crisis Group suggests that revenues earned from key exports, especially cotton, gold, maize and increasingly gas, are distributed among a very small circle of the ruling elite, with little or no benefit for the populace at large. The early-2010s high-profile corruption scandals involving government contracts and large international companies, notably TeliaSonera, have shown that businesses are particularly vulnerable to corruption when operating in Uzbekistan.

According to the Economist Intelligence Unit, "the government is hostile to allowing the development of an independent private sector, over which it would have no control".

The economic policies have repelled foreign investment, which is the lowest per capita in the CIS. For years, the largest barrier to foreign companies entering the Uzbekistan market has been the difficulty of converting currency. In 2003 the government accepted the obligations of Article VIII under the International Monetary Fund (IMF) providing for full currency convertibility. However, strict currency controls and the tightening of borders have lessened the effect of this measure.

Uzbekistan experienced rampant inflation of around 1000% per year immediately after independence (1992–1994). Stabilisation efforts implemented with guidance from the IMF paid off. The inflation rates were brought down to 50% in 1997 and then to 22% in 2002. Since 2003 annual inflation rates averaged less than 10%. Tight economic policies in 2004 resulted in a drastic reduction of inflation to 3.8% (although alternative estimates based on the price of a true market basket put it at 15%). The inflation rates moved up to 6.9% in 2006 and 7.6% in 2007 but have remained in the single-digit range.

The government of Uzbekistan restricts foreign imports in many ways, including high import duties. Excise taxes are applied in a highly discriminatory manner to protect locally produced goods, although the excises taxes were removed for foreign cars in 2020. Official tariffs are combined with unofficial, discriminatory charges resulting in total charges amounting to as much as 100 to 150% of the actual value of the product, making imported products virtually unaffordable. Import substitution is an officially declared policy and the government proudly reports a reduction by a factor of two in the volume of consumer goods imported. A number of CIS countries are officially exempt from Uzbekistan import duties. Uzbekistan has a Bilateral Investment Treaty with fifty other countries.

The Republican Stock Exchange (RSE) opened in 1994. The stocks of all Uzbek joint stock companies (around 1,250) are traded on RSE. The number of listed companies as of January 2013 exceeds 110. Securities market volume reached 2 trillion in 2012, and the number is rapidly growing due to the rising interest by companies of attracting necessary resources through the capital market. According to Central Depository as of January 2013 par value of outstanding shares of Uzbek emitters exceeded 9 trillion.

Thanks in part to the recovery of world market prices of gold and cotton (the country's key export commodities), expanded natural gas and some manufacturing exports, and increasing labour migrant transfers, the current account turned into a large surplus (between 9% and 11% of GDP from 2003 to 2005). In 2018, foreign exchange reserves, including gold, totalled around US$25 billion.

Foreign exchange reserves amounted in 2010 to US$13 billion.

Uzbekistan is predicted to be one of the fastest-growing economies in the world (top 26) in future decades, according to a survey by global bank HSBC. Uzbekistan was ranked 82nd in the Global Innovation Index in 2023.
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