Economy of Uzbekistan

According to cheeroutdoor, sovereign Uzbekistan has embarked on the path of socio-economic transformations aimed at creating a sustainable socially oriented market economy open to the world economy. A distinctive feature of the Uzbek model of reforms is the focus on achieving the final result, which ensures the growth of the population’s well-being. It proceeds from the need for deep structural transformations in the national economic complex as the main condition for achieving macroeconomic stabilization, economic growth and well-being of the population, inclusion in the world economy. Another important block of reforms is institutional reforms. These tasks were solved through a combination of economic (stabilization programs, demonopolization, denationalization and privatization, agrarian reforms) and political measures,

In a relatively short period of time, it was possible to develop a regulatory and legal framework for reforms, dismantle many of the institutions of the former centrally planned system, replacing them with market ones, ensure financial and primary macroeconomic stabilization, implement institutional reforms and create a diversified economy, lay the foundations of a market infrastructure, form mechanisms to stimulate small and medium-sized businesses, create new sectors of the economy, achieve energy independence and move closer to grain independence, preventing a massive decline in production and social cataclysms. Since 1995, the decline in industry has stopped, and since 1996, production growth has resumed in the sectors of the real sector and in the economy as a whole. The volume of GDP in 2001 surpassed the level of 1991.

The most important result of market reforms is the transition from monopoly state ownership to a mixed economy in the course of a phased process of denationalization and privatization. As of January 1, 2002, 88.3% of the total number of registered economic entities operated in the non-state sector. In 2001, the non-state sector produced more than 74% of GDP, more than 70% of industrial and 99% of agricultural products, formed approx. 98% of retail turnover. It accounted for 76% of the total number of people employed in the economy. Since 2000, the emphasis has shifted from quantitative indicators to issues of restructuring industries, improving mechanisms for post-privatization support for enterprises, and other qualitative aspects of the privatization process. The state seeks to limit its interference in business activities.

According to the World Bank classification, Uzbekistan is included in the group of countries with low incomes. In 2000, the GDP was $7666 million, 0.2% of global GDP, and the per capita income was $308.

During the years of reforms, the prerequisites for the transition to sustainable economic growth have been created, but sustainability itself has not yet been achieved. The difficulties are primarily related to the lack of capital. The volume of investments in 2002 was almost 1/5 below the level of 1991. Investment activity revived somewhat after 2000. The rate of gross savings in 2001 increased to 20.2% of GDP, but still significantly below the level of 1996. The dependence of the investment process on external sources increased. The share of foreign investors’ funds in the total volume of investments increased from 14% in 1995 to 29.3% in 2001. Insufficiently effective structural policy, eliminating the previous disproportions in the economy, led to the emergence of new ones, which manifested itself in a significant budget deficit, a deep gap between the official and market rates of the soum, high inflation.

Thanks to anti-inflationary regulation measures, the deepest inflation of 1991–92 and 1993–94 was suppressed. However, the 2000-01 consumer price index testifies to continuing inflationary tendencies generated by the restructuring of production, the process of convergence of domestic prices with world, institutional transformations.

The presence of a significant mass of labor-surplus population brings to the fore the issues of employment. In 1992-2002, the number of unemployed registered with employment services increased from 8.8 to 45.6 thousand people, and the unemployment rate increased from 0.1 to 0.5%.

To con. 1990s The slowdown in economic growth began to be affected by the insufficient depth of ongoing reforms, the lag in the development of market infrastructure, the low efficiency of many privatized enterprises, the lack of progress in the development of small and medium-sized businesses, the bureaucratization of structures created to support it, difficulties in attracting external investors, etc. d. In 2000, economic policy underwent a major adjustment in the direction of further liberalization and deepening of market reforms, especially in matters of further denationalization of economic activity, privatization, removal of barriers to the development of entrepreneurship, tax, price and currency policy, and the sphere of foreign economic activity.

During the years of reforms, the agrarian-industrial economy of Uzbekistan has acquired an agrarian-service character. In 2001, industry accounted for 16.2% of gross value added, agriculture for 34.5%, construction for 6.7%, and services for 42.6%. 12.7% of the total number of employees worked in industry, 33.5% in agriculture, 7.7% in construction, and 46.1% in the service sector.

At the same time, the development and implementation of structural policy, the course towards the priority development of industries that ensure the introduction of the achievements of scientific and technical progress into production, equal participation in world trade made it possible to avoid de-industrialization and primitivization of the structure of the industry itself. Since 1998, the share of industry in gross value added has remained at the same level.

The development of oil and gas production made it possible already in 1995 to refuse to import oil, and then to become an oil exporter. Thus, the problem of ensuring energy security was solved. In the basic industries, enterprises using modern technologies have been built and are being built – the Bukhara Oil Refinery, the Shurtan Petrochemical Complex, the Ferghana Plant of Furan Compounds, the first stage of the Kyzylkum Phosphorite Plant. Own automobile industry has been created – factories in Asaka and Samarkand, high-tech industries have been developed – electronic, radio engineering industry, instrument making. The share of individual sectors in the structure of industrial production in 2001 was (in%; data for 1991 in brackets): fuel and energy complex – 21 (6), light – 20 (41), food – 13 (15), metallurgical – 12 (10), mechanical engineering and metalworking – 11(11),

As a result of the agrarian reform, the private sector grew and became stronger, whose share in the total volume of agricultural production in 2001 exceeded 73%. Land in Uzbekistan remains state property. The main goal of agrarian policy is to move away from cotton monoculture while stabilizing its production as the main export crop and to increase grain production in order to achieve grain independence. During 1990-2001, grain production more than doubled, but still far from the level that ensures grain independence, the production of raw cotton in 2001 exceeded 3.26 million tons. 1990s began to slowly recover (except for astrakhan sheep), but even lower than in 1991.

An important direction of structural restructuring is the development of the transport system, incl. participation in the TRACECA project, expanding access to world markets. The main mode of transport is automobile. In 2001, it accounted for 86.3% of the volume of all transported goods and 91.1% of the volume of passenger traffic. The length of paved roads is 74.4 thousand km, incl. public roads – 43.2 thousand km; railway lines – 6.3 thousand km, inland waterways – 1100 km, main pipelines – 13.4 thousand km. There are 267 airports, of which 10 have paved runways.

The development of communication systems still lags behind the needs of Ukraine. In 2001, there were 6.5 telephone sets per 100 inhabitants, 129.3 thousand units were registered. cell phones, 77 subscriber units of the Telex network, 1392 data transmission units by e-mail. The number of Internet users in 2002 was 100,000. After the construction of the Uzbek section of the Trans-Asian-European fiber-optic communication line is completed, the country will have an independent access to the international communication system.

The volume of retail trade turnover in 2001 amounted to 132% of the level of 1991, with ser. Since the 1990s, its growth has become relatively stable. The share of food products is 61%, while the share of non-food products is 39%.

The service sector in terms of growth rates is ahead of other sectors of the economy. Of the total volume of paid services in 2001, household services, transport services and housing and communal services accounted for 73.2%, educational services – 5.7%, medical, sanatorium-resort – 2.7%, cultural – 0, eight%.

Foreign tourism can become an important source of foreign exchange earnings. In terms of its recreational resources, Uzbekistan occupies 10-11th place in the world; there are more than 3,000 monuments of history and culture in the country. A state program for the development of tourism up to 2005 was adopted. During 1993-2000, the flow of tourists, mainly from the Russian Federation, CIS countries, France, Germany, and Japan, tripled. The prospects for this sector are associated with the development of tourism infrastructure, the expansion of the foreign exchange base of tourism enterprises, and the improvement of mechanisms for managing the tourism business.

The economic policy of the state is aimed at the formation of market structures, the revision of property relations, the creation of a new financial and banking system, the transformation of the management system, ensuring dynamic development based mainly on its own resources, economic and environmental security, and integration into the global economy.

The main content of social policy is to protect the interests of the individual and the family, improve the welfare of the population, ensure employment, realize human potential, and maintain social harmony.

The introduction in July 1994 of the national currency – the soum – made it possible to pursue an independent monetary policy. Since the end of 2001, a course has been taken for further tightening of monetary policy, strengthening control over monetary aggregates, and strengthening cash circulation.

Since 2000, measures have been taken to liberalize the monetary policy, aimed at expanding the over-the-counter foreign exchange market, accelerating the unification of the official and market exchange rates of the sum. Since October 2003, the conversion of the soum for current operations has been introduced.

A two-tier banking system has been created in Uzbekistan. The Central Bank of Uzbekistan (CBU) carries out monetary regulation, issue of money, regulation of banking activities, supervision of banks, etc. In 2000, there were 36 commercial banks, incl. 4 – with the participation of foreign capital, 7 – private, 4 – state, the rest – joint-stock commercial. Since 1998, the banking system has been reformed, providing for the liberalization and restructuring of all areas of its activity.

The state budget is chronically reduced to a deficit, which, however, has a downward trend (-9.6% of GDP in 1995, -1.4% of GDP in 2001). The revenue part of the budget is mainly formed from tax revenues, in the expenditure part approx. 1/2 is occupied by the content of the socio-cultural sphere. In the course of deepening the reforms, it is planned to reduce the share of GDP redistributed through the budget, shift the focus from tightening tax collection to expanding the tax base and lowering tax rates, and increasing the role of the state in antimonopoly and price regulation to mitigate the crisis of non-payments.

The transition to market relations was not accompanied by a sharp deterioration in social indicators. The real disposable money income of the population compared to the level of the previous year was 126.4% in 2000, and 118.2% in 2001. The average salary of workers and employees in 2000 was more than 55 US dollars with a large differentiation by region, the average monthly old-age pension in 2001 was 26 US dollars. In the income structure, approx. 54% is wages, more than 33% – income from business activities, 13% – social transfers (2001). In the structure of expenses, more than 94% are the costs of paying for goods and services and mandatory payments, 2.6% are savings in deposits, securities and the purchase of foreign currency (2001).

The concept of social policy is based on the need to improve the well-being of the population, to prevent the growth of poverty and low income. Below the poverty level in Uzbekistan is 29% of the population (1998). The decile coefficient of income differentiation of the population is relatively low, but in con. 1990s it has grown significantly since 1995.

The development of multi-vector foreign economic relations is an integral part of the strategy of transition to a market economy. Uzbekistan has established trade and economic relations with more than 140 countries of the world.

Since 1992, foreign trade turnover has more than tripled and in 2002 exceeded $5,659 million (exports $2,688.4 million, imports $2,970.6 million). The main trading partners of Uzbekistan (72.4% of exports, 63.1% of imports in 2002) are countries outside the CIS. Of the CIS states, the most important partner is the Russian Federation (38.6% of Uzbek exports to the CIS countries and 59.5% of imports from these countries in 2002). Export retains a predominantly raw material character and is poorly diversified – approx. 60% are cotton and gold. The increase over the years of reforms in the absolute volumes of exports of goods with a high degree of processing, incl. new (cars, electronics), has not yet led to fundamental changes in the structure of exports, making the economy of Uzbekistan extremely dependent on fluctuations in world prices. The share of machinery and equipment in exports in 2002 was 3.9%. The constantly growing share in the import of machinery and equipment (41.5% in 2002) is the result of the policy pursued in Uzbekistan for the technical re-equipment of the national economy through state investment. In the foreign economic strategy of Uzbekistan, a transition is planned from import substitution to export orientation.

A necessary condition for economic growth is the influx of funds from abroad, most of which are loans and credits on a bilateral basis. The volume of foreign direct investment for 1994-2000 amounted to 877 million US dollars. At the beginning 2001 1958 FDI were active, incl. 53.5% – in industry, 26.5% – trade and public catering. External debt in 1999 exceeded $4.5 billion, or 25% of GNI.

Economy of Uzbekistan