Economic growth in Uzbekistan is projected to further decelerate this year as a result of the coronavirus disease (COVID-19) pandemic, weak demand, slowing industrial output, and a decline in services, according to a new report released by the Asian Development Bank (ADB).
In an update to its flagship annual economic publication, Asian Development Outlook (ADO) 2020, ADB forecasts Uzbekistan’s GDP growth at 0.5% in 2020, down from the 1.5% forecast in June. However, GDP is expected to rebound strongly to 6.5% in 2021, consistent with ADB’s projection earlier this year.
“While our report estimates reduced growth this year, it is expected to rebound in 2021 with anticipated recovery in services and industry.” said ADB Country Director for Uzbekistan, Cindy Malvicini. “We continue to stand by the people of Uzbekistan, helping to mitigate the adverse health, social and economic impacts of the disease, so that the country can overcome the pandemic and the economy can recover as quickly as possible.”
The bank’s forecasts for inflation remain unchanged at 13% in 2020 and 10% in 2021. Pandemic-related disruptions raised food price inflation in the first 7 months of 2020 while inflation for other goods and services in the same period slowed. Meanwhile, depreciation of the Uzbek sum year on year against the US dollar rose from 2.5% in the first half of 2019 to 6.7% this year.
Uzbekistan’s current account deficit widened to 7.7% of GDP in the first half of 2020 from 6.8% in the same period last year, as travel restrictions and weakness in the Russian Federation cut remittances while exports of goods fell by 19.7% with lower demand and prices for natural gas and copper. Supply chain disruptions cut imports of goods by 14.1%, with notable declines in imports for construction and industry. Exports of services dropped by 38.6%, and imports by 28.4%. With continued weakness in exports and remittances, the bank projects a wider current account deficit in 2020, narrowing in 2021 as exports and remittances recover.