Uzbekistan's GDP could grow 6% in 2022, less than 5% in 2023 - IMF
TASHKENT. Nov 17 (Interfax) -Uzbekistan's GDP could grow 6% in 2022, compared with 5% in 2021, and inflation might be around 12%, compared with 10% a year ago, the International Monetary Fund said.
An IMF mission met with the authorities of Uzbekistan during November 7-15 to discuss economic developments and prospects, as well as policy priorities.
"Contrary to expectations earlier this year, money transfers, including remittances, more than doubled, and together with continued fiscal support and resilient trade this has supported economic activity and growth in Uzbekistan. As a result, Uzbekistan's economy is projected to grow by almost 6% in 2022," the IMF said in an end-of-mission press release.
"Inflation has increased and become more broad-based, reflecting rising prices globally, especially of food and energy. Thanks to the Central Bank of Uzbekistan's decisive and timely actions, inflation is expected to remain contained at about 12% by end-2022," it said.
"Global economic growth is projected to slow in 2023 and, despite this slowdown, inflation could prove more persistent. As a result, and while domestic demand is expected to remain relatively buoyant, economic growth in Uzbekistan is projected to slow somewhat in 2023, to just under 5%. Inflation is expected to remain elevated," the IMF said.
Downside risks to Uzbekistan's economic outlook include risks stemming from a possible further escalation of the situation in Ukraine, while global growth could slow further, and financial conditions could deteriorate, it said.
"Monetary policy may need to be tightened if food and energy price pressures feed more broadly into core inflation, to avoid that inflation expectations become un-anchored, it said. Preferential lending programs should be reduced further and replaced by interest rate subsidies for critical activities," the IMF said.
"Despite the headwinds, the authorities are continuing with market-oriented structural reforms, to enable a shift from public to stronger private sector-led growth," it said.
It said land reform should be accelerated, including in agriculture, to provide secure and tradable land rights. Energy and water tariffs will need to be raised gradually to cost recovery and then to market levels, to increase efficiency and attract further investment, free up budget resources for more pressing spending needs, and help with the shift toward a greener economy. Raising tariffs should be accompanied by adequate support for vulnerable households.
Efforts to reduce the large role of the state-owned banks in the banking system and capital market reforms need to continue to enhance financial intermediation and access to finance.
"Accelerating WTO accession negotiations and increased cooperation with neighboring countries, including to improve and create new transport routes, will help to make Uzbekistan an attractive investment destination," the IMF said.
The IMF in May 2020 approved $375 million in support for Uzbekistan to mitigate the effects of the Covid pandemic.
Uzbekistan joined the IMF in 1992. In 1995, the fund extended a $140 million loan to the republic for stabilizing the national currency and approved a stand-by loan for $185 million. In 1996, it suspended the implementation of the stand-by program because Uzbekistan failed to comply with cooperation conditions. Uzbekistan resumed active cooperation with the IMF after Shavkat Mirziyoyev was elected president in 2016.