Page 53 - bne magazine February 2022_20220208

bne February 2022 OUTLOOK 2022 I 53
The Taliban leadership promised “not to shoot a single bullet” towards its neighbour. Tashkent is proving helpful in the Taliban’s appeal for the unlocking of Afghan capital frozen abroad to help ward off an economic and humanitarian crisis, though Tashkent’s voice is only one of many in these matters. Uzbekistan clearly doesn’t want to see Afghanistan, on its doorstep, sliding into catastrophe and chaos. And a stable Afghanistan is vital to Uzbekistan’s hopes to build up trade and investment with South Asia.
One political event scheduled to take place in Uzbekistan in the coming year is a summit of the Organisation of Turkic States. The country will also host the regular meeting of the military department heads of the Shanghai Cooperation Organization (SCO) states.
Macro economy
Uzbekistan’s macroeconomic development in 2022 should be founded on gradual improvements in external and internal indicators, as long as no significant external risks come to pass. The US Federal Reserves battle with inflation could potentially have negative ramifications for emerging economies worldwide should it not go well.
If the pandemic is successfully beaten back, long-term restrictions on the migration of human resources and cross-border movement will not be introduced.
GDP growth
Before the pandemic hit, Uzbekistan’s GDP was rising at a rate of more than 6% a year. But in 2020 growth fell to a mere 1.7%. The bounceback in 2021 brought 6.9% in
“Before the pandemic hit, Uzbekistan’s GDP was rising at a rate of more than 6% a year. But in 2020 growth fell to
a mere 1.7%.”
the first nine months, according to the Central Bank of Uzbekistan (CBU).
As the economy returns to health, the international financial institutions (IFIs) have upped their forecasts for 2022. The International Monetary Fund (IMF) revised its GDP growth outlook for 2022 to 6%. The World Bank is predicting 5.6%, while the Asian Development Bank (ADB) is a little more cautious at 5.5%. The highest growth rate is projected by the European Bank for Reconstruction and Development (EBRD). It sees 6%.
External environment
Uzbekistan’s foreign trade has expanded significantly since incumbent Shavkat Mirziyoyev took office in 2016. Since the liberation of the FX market in 2017, companies have leapt at the chance to seal their own export deals and trade is flourishing.
According to official data for January-October 2021, Uzbekistan’s foreign trade turnover got back on the rails following the impacts of the first year of the pandemic, reaching $32.7bn, up 8.5% y/y.
Of the total trade volume, exports amounted to $12.4bn, (down 6.7%), while imports surged 20.5% to reach $20.2bn.
Among the 20 major partner countries of Uzbekistan in foreign economic activity, active foreign trade balances were observed with four countries – Afghanistan, Kyrgyzstan, Tajikistan and Turkey.
China remains Uzbekistan’s most important trade partner. However, turnover with the “ancient” counterpart did not in 2021 regain pre-pandemic levels, whereas trade with the other Central Asian republics and Turkey did surpass the levels seen in 2019.
To improve the balance of payments equation, Tashkent is investing in adding value to production. Uzbekistan’s biggest export item is now textiles. That in itself is
a reflection of the state’s new policy of aggressively targeting value-added exports. A ban on raw cotton exports has forced cotton growers to invest in textile production.
Accessions into the EU Generalised System of Preferences Plus (GSP+) scheme and its UK analogue (Generalised System of Preferences Enhanced Framework) will yield trade gains in coming years as tariffs are slashed.
If the country finalises its decision to join the World Trade Organisation (WTO), foreign trade figures can be expected to skyrocket.
Inflation and monetary policy
The government forecasts that inflation will decline to 10% by the end of 2021, 9% in 2022 and 5% in 2023.
European Bank for Reconstruction and Development (EBRD) economist Eric Livny observed to bne IntelliNews that even 10% was a rather high figure, but such price growth was not an Uzbek phenomenon as, amid the pandemic, inflation had gained momentum worldwide.
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