Uzbekistan recorded its first coronavirus (COVID-19) case on March 15. The country’s response since then has been exceptionally proactive, equal to the responses seen in Singapore, South Korea, Taiwan and Hong Kong in combatting the challenge in taking the route of not “turning off” the economy but rather being aggressive in isolating cases and increasing restrictions as cases have risen—at present (April 13) there are 1,054 active cases, four deaths and 89 recoveries.
Proactive measures were taken from the very first virus case. Starting from March 16, the spring school holiday was brought forward and schools were closed, while weddings and large social gatherings were banned. Then, on March 22, after the start of the Navruz (or Nowruz) holidays, celebrating the start of spring, as cases rose further all food and beverage establishments were forced to close and only permitted to fulfil carryout and delivery orders.
The week of March 23 saw a ratcheting up of government measures including fines, equivalent to $70, for people going outside without a mask, cities put into lockdown with no permitted inter-city travel and the banning of groups of more than three people in public. On March 30, passenger cars were banned from the streets (special permits available for those who prove a need to use their cars) and the lockdown was extended to April 20 to help ensure the virus is stamped out.
Meanwhile, construction sites are busy and there is still some traffic on the roads; of course a decrease from normal levels, but life continues unlike in many other countries with the virus.
Mere one day of “panic”
March 16 saw the closing of national borders and airports for individual travel (all land borders and the airports remained open for commercial imports and exports). There was essentially a mere one day of “panic” at grocery stores and bazaars. Though, from March 16 through to today all markets and bazaars are open, prices have not been inflated (helped by the country’s large domestic manufacturing and agro-processing base) and store shelves have been fully stocked with zero-rationing measures, unlike in places such as the US where certain states are rationing purchases of chicken, meat, fish and other products.
Uzbekistan’s first coronavirus cases stemmed from one returnee from France and one from Istanbul. Each person on the planes they travelled on was put under government quarantine along with their families. Additionally, all of their direct contacts were required to self-quarantine. Coronavirus cases increased lately due to Uzbekistan repatriating overseas citizens.
There have been reports that Uzbekistan has been building hospitals in the regions, but these facilities are actually quarantine facilities, with a medical component of course, ensuring all Uzbeks returning from abroad are isolated accordingly so as not to potentially spread the virus throughout the general population.
Where the economy is concerned, on March 19 the government approved a handful of measures to ensure stability. The stability package is valued at $1bn (UZS 10 trillion). It is likely to be funded by gold reserves the government sold late last month, luckily before gold prices corrected due to the liquidation in the global financial system.
The stability package includes broad tax breaks and holidays for the economy, with the deepest breaks (estimated at 30%) to be given to the tourism industry; companies in the hospitality, catering and education industries being given a holiday on debt service until October 1, guaranteed by the government; UZS 500bn in loans/support made available to small and medium sized enterprises; and fast-tracking the implementation of infrastructure projects in the regions (they were on the agenda but their start dates have been moved up).
When the stability package was announced the finance minister stated that he expected a decrease in GDP growth of 1.8pp which means 2020 GDP growth expectations have been revised to +4% for the year. The major contributors to the decrease in GDP growth are an expected impact of $150mn on the tourism industry and a decrease in materials exports of $400mn (agriculture and fertilisers at $100mn, textiles at $80mn and copper at $60mn), in addition to a decrease in natural gas exports. The government aims to transition to zero gas exports by the middle of the decade anyway as it prefers to instead increase production of value-added petrochemical products for export.
Ironically, the virus is also giving Uzbekistan the impetus to speed up reforms in streamlining bureaucratic procedures, specifically in the import and export arena, which should significantly stimulate exports over the coming years. This includes the elimination of export guarantees and creating new border procedures to streamline import/export permit issuance and simplifying customs clearance.
Uzbekistan has the opportunity to emerge from this crisis stronger, especially if the government can utilise its large gold reserves (which should see a marked increase in value over coming years) to support the economy through exchange rate support and investment into education, healthcare and infrastructure.