(Analytical review based on data from the CAREC Institute: CAREC Institute Quarterly Economic Monitor No.15)
Inflation Dynamics in CAREC in 2024
In 2024, the countries of the Central Asia Regional Economic Cooperation (CAREC) experienced two distinct inflationary phases. In the first half of the year, inflation slowed significantly, but in the second half, it started rising again. The average inflation rate in the region dropped from 13.5% in February 2023 to 5.6% in December 2024, largely due to a sharp decline in inflation in Pakistan – from 31.5% to 4.9%, marking the lowest level since 2018.
However, between June and December 2024, inflation started to rise again in several countries:
- Azerbaijan – from 1.1% to 4.9%
- Kyrgyzstan – from 4.5% to 6.3%
- Mongolia – from 5.1% to 9.0%
- Tajikistan – from 3.5% to 4.1%
Meanwhile, inflation continued to decline in some economies:
- China – from 0.2% to 0.1%
- Georgia – from 2.2% to 1.9%
- Pakistan – from 12.6% to 4.1%
- Uzbekistan – from 10.6% to 9.8%
Despite the overall decline in inflation across several countries, Kazakhstan, Mongolia, and Uzbekistan still recorded inflation rates above their central banks’ target levels.
Uzbekistan: Positive Trends and Ongoing Challenges
In 2024, inflation in Uzbekistan slowed from 10.6% to 9.8%, which is a positive sign amid global economic uncertainty. This was driven by several key factors:
– Monetary policy control – The Central Bank maintained an inflation-targeting approach, preventing excessive price growth.
– Exchange rate stability – Moderate fluctuations of the Uzbek sum contributed to price predictability for imported goods.
– Food security improvements – Increased domestic production of certain agricultural products helped stabilize food prices.
However, some challenges remain:
– Electricity tariff hikes – The May 2024 increase in electricity prices led to rising production costs and inflationary pressures.
– Food price volatility – While the overall trend is positive, specific product categories still saw price increases.
– Limited access to credit – High borrowing costs constrained consumer demand and business activity.
Outlook for 2025: Risks and Opportunities
Uzbekistan is expected to see further inflation reduction in 2025, but several factors could influence price stability:
– Further tariff liberalization – If additional price hikes occur without mitigating measures, inflationary pressure could rise.
– External economic conditions – Increases in global prices for imported food and energy resources may pose inflation risks.
– Domestic market competition – Supporting small and medium-sized enterprises could enhance price stability.
Considering these factors, Uzbekistan’s inflation is projected to remain in the range of 7-9% in 2025, moving closer to the Central Bank’s target.
Economic Prospects for the Region
Despite inflation fluctuations, CAREC economies demonstrated resilience and robust economic growth in 2024. According to the CAREC Institute, most regional economies maintained strong growth rates, with exports and services emerging as key drivers.
For Uzbekistan, 2024 was a crucial period of economic adaptation. In 2025, the country is expected to focus on investment, infrastructure modernization, and improving business competitiveness.