This regular economic report records theeconomic activities ofUzbekistan for the year 2013-2014.Uzbekistan’s outlook remains largely dependent on commodityprices. The chief external factors affecting economicperformance of Uzbekistan are favorable global commodityprice trends for gold, gas, cotton, and copper. Althoughremittance inflows may suffer as the outlook weakens forRussia, government increases in wages and social paymentswill help to sustain private consumption. Thus, growth inUzbekistan is not expected to slow down considerably, assurplus current account, high fiscal savings, externalreserves, ongoing investment program and wage increase andremittance inflow in 2013–14 would mitigate the impacts of acontinued global slowdown. However, the poor businessenvironment will continue to deter most Western investors,and the authorities likely to continue impedingprivate-sector activity by retaining currency controls andhigh tariffs and excise taxes on imports. Inflation isexpected to remain at around 7 percent in 2013–15. Globalfood prices are forecast to gradually decline, and moremodest growth in net foreign assets and monetary indicatorswould offset higher government spending and limitinflationary pressure. Although the short-term growthoutlook remains favorable, downside risks are high due to astill weak global situation. The first risk is external andstems from a possible slowdown in economic activity inRussia (and a consequent reduction in remittance flows toUzbekistan) and likely lower prices for some of Uzbekistan’straditional commodity exports. The second risk is internaland comes from inappropriate integration of generally soundmacroeconomic policies with weak structural policies in thecountry that negatively affect business incentives andhamper improvements in productivity and appropriate jobcreation making long term growth unsustainable.
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