This analytical article is based on the Asian Development Bank (ADB) report, “Accelerating Private Sector and Green Transformation in Uzbekistan”, published in January 2025. The report provides an in-depth assessment of Uzbekistan’s economic transformation, focusing on the development of the private sector and green growth initiatives.
Key Focus Areas of the Report
The report highlights six critical areas:
- Macroeconomic performance and structural challenges
- Strategic investments for green growth
- Agricultural reforms and food security
- Private sector development, privatization, and access to finance
- Human capital development and education sector reforms
- Regional cooperation and economic integration
By addressing these areas, Uzbekistan aims to transition toward a market-driven economy with reduced state intervention and an enhanced business climate.
- Macroeconomic Performance: Growth, Inflation, and Trade
1.1 Economic Growth and Structural Shifts
Since launching economic reforms in 2017, Uzbekistan has experienced stable economic growth:
GDP growth (2017–2022 average): 5.2% per year
GDP growth in 2023: 6%, driven by expansionary fiscal policy, increased consumption, and rising fixed investment
Sectoral contributions (2017–2022):
- Services: 40% of total value-added growth
- Industry: 26%
- Agriculture: 25%, though its share declined from 32% in 2017
While industrial growth remains robust, green and high-value-added sectors remain underdeveloped. The forecast for 2024–2025 suggests a slowdown in services and agriculture but continued strong growth in industrial output, particularly in food and textile exports.
1.2 Inflation and Monetary Policy
- Average inflation (2017–2023): 4%, mainly driven by food prices
- Inflation in 2023: 8%, reflecting tight monetary policies
- Target inflation by 2024: 5% (Central Bank of Uzbekistan)
Despite inflation control efforts, high dollarization remains a concern:
- 47% of total bank loans were denominated in foreign currency in 2022
- Interest rates in 2022:4% (local currency loans), 7.0% (USD loans)
1.3 Trade Balance and Foreign Investment
Uzbekistan’s foreign trade volume doubled from $24 billion in 2016 to $50 billion in 2022.
Exports (2022):
- Gold: $5.5 billion
- Textiles: $3.1 billion
- Fruits & Vegetables: $2.2 billion
Imports (2022): Machinery, equipment, and petroleum products
The current account deficit in 2023 reached 5.5% of GDP, primarily financed by foreign direct investment (FDI) and private borrowing.
- Private Sector Growth and Green Investment
2.1 Private Sector Development and Privatization
Despite economic liberalization, state-owned enterprises (SOEs) still dominate key sectors such as energy, transport, and banking.
- 2021 privatization strategy: Target to reduce SOEs by 75%
- Goal for private sector loans: Increase from 28% (2020) to 70% (2025)
Stock Market Challenges:
- Market capitalization in 2022: $200 million
- Target by 2026: $7 billion
2.2 Green Growth and Climate Strategy
Uzbekistan has committed to reducing greenhouse gas (GHG) emissions by 35% by 2030.
- Uzbekistan ranks 2nd in Central Asia for CO2 emissions
- Energy intensity is twice the global average
- 90% of Uzbekistan’s water is consumed by agriculture
Key Green Transition Priorities:
- Scaling up solar and wind energy
- Electrification of transport and railway modernization
- Energy efficiency improvements in industries
Currently, Uzbekistan is Central Asia’s largest recipient of multilateral development bank climate finance, but effective utilization of these funds remains a challenge.
- Agriculture and Food Security
Agriculture contributes 25% of GDP and employment
Major reforms (2020–2030):
- Liberalization of the cotton and wheat markets
- Expansion of cotton-textile clusters
- Export subsidies for horticulture and livestock
Key Challenges:
- Limited support for small-scale farmers (dekhqan farms)
- Uncertain land tenure policies discouraging investment
- Insufficient financing for climate-resilient agricultural practices
- Human Capital and Education Reforms
Government spending on education: 5.9% of GDP (2013–2022)
Challenges:
- Teacher shortages and low salaries
- Higher education access remains low (21% enrollment rate in 2021)
- Gender disparity in STEM fields
Proposed Reforms:
- Expansion of vocational training programs
- Digitalization of education
- Stronger alignment between education and labor market needs
- Regional Integration and Trade Expansion
Since 2017, Uzbekistan has strengthened its international economic ties:
Signed trade agreements with 47 countries
Major trade partners (2022):
- Exports: Russia, China, EU
- Imports: Kazakhstan, Turkey, South Korea
Upcoming Trade Opportunities:
- WTO accession negotiations are in progress
- Increased transport connectivity with Central Asia and China
- Special Economic Zones (SEZs) to attract foreign investors
Conclusion: Key Priorities for Sustainable Growth
To maintain long-term economic stability and competitiveness, Uzbekistan must focus on:
- Strengthening private sector participation and reducing SOE dominance
- Advancing green energy and sustainable infrastructure
- Expanding access to finance for SMEs and startups
- Investing in human capital through education and workforce training
- Enhancing trade liberalization and regional economic integration
By successfully implementing these reforms, Uzbekistan can accelerate its transition to a sustainable, market-driven, and resilient economy.
Source: ADB – Accelerating Private Sector and Green Transformation in Uzbekistan