Uzbekistan's efforts to fight poverty appear to be paying off in some respects, with the World Bank reporting the country's poverty rate has dropped to 11%, with more than 1.5mn people lifted out of official impoverisment.

The Central Asian nation until the spring of this year lacked internationally comparable poverty estimates, hindering a comprehensive assessment of its poverty alleviation efforts. 

However, since 2017, Uzbekistan has been revamping its poverty measurement system, culminating in the adoption of a new methodology in 2021, with assistance from the World Bank.

The World Bank's latest update of global poverty figures, released in March, marks the inclusion of Uzbekistan's data for the first time, providing a holistic view of the country's poverty reduction journey on a global scale. 

Uzbekistan, categorised as a lower-middle-income economy, decreased its poverty rate to 5% by 2022, as measured against the lower-middle-income poverty line of $3.65 per person per day in 2017 purchasing power parity (PPP). 

At the upper-middle-income poverty line, Uzbekistan halved its poverty rate from 36% in 2015 to 17% in 2022, outpacing the decline observed in the rest of Europe and Central Asia where the poverty rate decreased from 13% to 8% during the same period.

Uzbekistan has witnessed a reduction in poverty rates, primarily driven by factors such as the establishment of a new national welfare standard in 2021. This standard has led to a decline in poverty from 17% to 11% by 2023, with rural areas experiencing a more substantial decrease of 8% compared to urban areas of 4%. Approximately 1.6mn individuals have transitioned out of poverty as a result. 

 

The government's efforts to modernise and expand social benefit programs, particularly in improving pensions, have played a crucial role in poverty reduction. Alongside this, the growth in household income, mainly driven by wages, has been a major contributor, making up 60% of the progress in reducing poverty.

With this promising trajectory, Uzbekistan appears poised to achieve its goal of halving poverty by 2026.

 

Despite these strides, rising inequality poses a challenge to sustained poverty reduction efforts. Income growth has disproportionately favoured the affluent segments of the population, exacerbating inequality. 

For instance, from 2022 to 2023, the poorest 10% experienced a mere 6% income growth, while the richest 10% saw their incomes surge by over 30%. 

This disparity is reflected in the rise of the Gini Coefficient from 0.31 to 0.35 over the same period. Had inequality not increased, poverty could have declined even further, by 5.5 percentage points instead of the observed 3.1 percentage point decline.

To ensure continued progress in poverty reduction, the Uzbekistan government must intensify efforts to enhance the productive capacity of impoverished households. 

Addressing disparities in employment, education, and dependency ratios among households will be crucial in mitigating rising inequality and further alleviating poverty in the country.

Under former Uzbek president Islam Karimov, there were reports touting a drastic reduction in poverty, citing figures like a drop from 27.5% in 2001 to 14.1% in 2013.

However, critics argued that this narrative was far from accurate, especially given that the national minimum monthly salary hovered around $20, leading some to estimate the true poverty rate was closer to 77%, according to Peter Leonard's Substack blog on Central Asia, Havli.

Despite Mirziyoyev's administration ushering in a new era of transparency, openly acknowledging the existence of poverty and implementing reforms to address it, income inequality persists, with the wealthiest 10% experiencing a growth in income of over 30%, while the bottom 10% saw a meager rise of just 6% during 2022-2023.

This inequality is also evident geographically. Regions like Karakalpakstan and the Tashkent region bear disproportionate burdens. In these regions, lmost 30% and 26.5% of adults are living in poverty, respectively, according to the Multidimensional Poverty Index.