In apparent gain for transparency, Uzbeks report GDP growth at below 7% for first time in decade

In apparent gain for transparency, Uzbeks report GDP growth at below 7% for first time in decade
By Kanat Shaku in Almaty October 30, 2017

Uzbek GDP grew by 5.3% in the first nine months of 2017, down from the 7.8% reported for the same period of 2016, according to an October 27 statement from Uzbekistan's statistics office. GDP value amounted to UZS170.07tn (€18.15bn) in the period, the report added.

The figure marks the first time the Uzbek authorities have reported a growth figure below 7% within the last decade, having generally reported growth within the range of 7%-9%. Since the Uzbek government often reported notoriously unreliable growth figures under the late Islam Karimov who passed away last year, the new nine-month growth update might also amount to the first attempt by the Uzbek government to reflect economic realities more accurately.

Rapid double digit inflation that used to be fuelled by strict currency restrictions, which were lifted in September by the reformist President Shavkat Mirziyoyev, often raised suspicions that the country’s actual growth stood significantly below reported figures. The figures were frequently used as a selling point in promising stability for foreign investors. However, evidence of double and triple digit inflation in the country sometimes implied the Uzbek economy was possibly shrinking or slowing down.

The currency liberalisation brought in by Mirziyoyev should draw in more foreign investors as it makes it possible to repatriate profits in hard currency. Overall, the reform drive pursued by the president—which has also included the release of dissidents and human rights activists—is starting to clock up a good number of successes. For instance, the World Bank has entered discussions with Tashkent on possible backing it may be able to give to opening up the country economically—possibly including a $1bn loan according to some reports—while the European Bank for Reconstruction and Development (EBRD) has for the first time since 2007 approved financing for projects in Uzbekistan. Also, following what was the first official trip to Ankara by an Uzbek president since 1999, Mirziyoyev is hopeful that many Turkish businesses forced out of Uzbekistan by his predecessor will make a return.

Despite agreeing Uzbek GDP was just 5.3% in the first three quarters of this year, the government’s growth expectation for 2017 as a whole is forecast at 7.8%.

The country does not publish absolute figures that illustrate the methodology of how government officials have compiled growth figures. This has also often given rise to doubts about the real state of the economy.

Uzbekistan's industrial output in January-September 2017 amounted to UZS99.06tn, up by 5.6% y/y.

The country's agricultural output grew by 3.5% to UZS46.19tn in January-September, investment in fixed assets rose 1% to UZS39.53tn, construction works value in the country increased by 5.3% reaching UZS25.17tn, while retail trade turnover stood at UZS76.35tn in the period, growing 4.3% y/y.

Freight turnover in the country grew by 2.8% y/y in the nine-month period to 65.6bn tonnes-km, the statement said.

The International Monetary Fund projects Uzbekistan's GDP growth at 6.0% for 2017-2018.