Uzbekistan’s recent opening up for foreign investment will spur a “healthy rivalry” in Central Asia, potentially boosting the economy of neighboring Kazakhstan, the International Monetary Fund said.
“Uzbekistan will be a rival to Kazakhstan for investment in a positive way,” Mark Horton, assistant director of the IMF’s Middle East and Central Asia Department, said in an interview in the Kazakh capital Nur-Sultan on Tuesday. The competition “will make both countries work hard to improve transparency, their policy frameworks and business environment.”
Uzbekistan’s recent opening to foreign investment after years of isolation poses a potential threat to Kazakhstan’s position as the economic powerhouse of Central Asia. At 33 million people, Uzbekistan’s population is one and a half times bigger than Kazakhstan’s, but its economy is three times smaller, according to IMF data.
The Uzbek authorities have a strong appetite for policy advice and technical assistance from the IMF and are embarking on very complicated and wide-ranging reforms in a short period of time, Horton said.
Uzbekistan has a bigger market and a diverse and well-developed economy, especially the industrial sector, so it won’t necessarily compete against Kazakhstan in all areas, Horton said. The country should look for ways to benefit from Kazakhstan’s earlier experience in attracting foreign investment and both need to be open to cooperation and mutual investment, he added.
Bilateral trade between Kazakhstan and Uzbekistan increased from $1.5 billion in 2016 to $2.5 billion in 2018, according to the Kazakh Economy Ministry.