In 2024, Uzbekistan showcased outstanding economic performance, setting a new national record for attracting foreign investment. The total volume of capital inflow into the economy reached $34.9 billion, with foreign direct investment (FDI) experiencing explosive growth of 53.6% to hit $11.9 billion. These figures underscore the growing confidence of the international business community in the country’s ongoing reforms.

Drivers of Growth: Reforms and a Stable Economy

The investment boom in Uzbekistan is driven by several key factors. Large-scale economic reforms, particularly the reduction of the value-added tax (VAT) from 20% to 12%, have significantly improved the fiscal climate. The simplification of tax administration and the introduction of a “single window” system for business registration and support have removed many bureaucratic hurdles.

The country’s economy is demonstrating stable dynamics, with annual GDP growth of 6-7%, and industrial production reaching $76 billion. According to a recent Investor Perception Report by Montfort Eurasia, the understanding of the region among US and UK investors has markedly improved, rising from a rating of 4.92/10 in 2023 to 7.36/10. Interest in the Central Asia and Caucasus region from these investors has tripled over the past year.

Key Sectors Attracting Investment

The most attractive industries for capital include:

• Energy: Over the last five years, the sector has attracted approximately $20 billion. A flagship project is the construction of a 5 GW wind power plant, the largest in Central Asia.
• Mining: The industry is showing success with the placement of NMMC bonds on the London Stock Exchange and the launch of rare-earth metal extraction projects valued at $2.6 billion. A new mining law passed earlier this year creates a solid framework for foreign companies.
• IT Sector: This field is experiencing rapid growth, with IT service exports tripling to $900 million and the overall industry expanding by 125%.

Investor Outlook and Prospects

Despite the evident progress, the Montfort Eurasia report indicates that the primary concerns for 76% of investors remain investment security and political stability (65%). The sectors generating the most interest are industry and manufacturing (63.5%), oil and gas (57.9%), and mining and natural resources (49.2%).

Analysts predict that if the current growth rates are maintained and reforms continue, Uzbekistan has every chance of entering the top three most attractive countries for investment in Central Asia by 2026.

Source: Montfort Eurasia