In 2024, economic growth in Central Asian countries is forecast to fall to 5.4 per cent, but rise to 5.9 per cent in 2025. This forecast is contained in the ‘Regional Economic Prospects’ report published by the European Bank for Reconstruction and Development (EBRD), Trend reported.
The report notes that the volume of intermediated trade with Russia, which contributed significantly to the growth of Central Asian economies in 2023, has now reached its peak.
‘The severe flooding and extreme cold weather affecting Kazakhstan and Mongolia respectively will negatively impact their growth in the short term, but the region’s outlook for 2024 and 2025 remains very positive,’ EBRD analysts said.
Over the past two years, public and private investment in transport, logistics and export-oriented production capacity has increased significantly in the region.
‘Rising wages and real incomes, together with an increase in visitor numbers and a growing tourism sector, have fuelled a consumer boom supported by technological advances in consumer credit,’ the report said.
Intra-regional trade, investment and tourism continued to grow, fuelled by strengthened regional cooperation in addressing common challenges such as water and energy scarcity and bottlenecks in transport and border management.
Inflation fell to single digits in all countries, allowing Central Asian central banks to loosen monetary policy and focus on economic growth, the EBRD said.
The EBRD expects the region’s public policy priorities in 2024-2025 to include the urgent need to improve infrastructure and governance, implement tariff reforms and reach agreements on the use of common resources such as transport, water and energy.
Uzbekistan recorded real GDP growth of 6 per cent in 2023, driven by credit expansion, increased remittances and travellers. Services, construction and general industry were the main growth drivers. Export revenues increased significantly, thanks to increased gold exports, tourism revenues and growth in shipments of food and manufactured goods.
The EBRD estimates that Uzbekistan’s ongoing tariff reforms will help reduce energy subsidies and reduce government spending by around 1.5 per cent of GDP. The economy is projected to grow by 6.5 per cent in 2024 and 6 per cent in 2025, with fixed investment and net exports as the main drivers of growth.
The EBRD warned that privatisation and market reforms could improve prospects by attracting foreign direct investment, but that economic growth could be constrained by shortages in energy and water resources.
Recall that in May 2023, the EBRD estimated that Uzbekistan’s economy would grow by 6.5% in 2023 and 2024, thanks to inflows of foreign investment, companies and individuals, as well as successful privatisation and business environment reforms.