Uzbekistan

Sustained economic growth, but under state control

Economic growth is expected to remain robust in 2025 and 2026, despite a slight slowdown. This resilience stems from the scale of structural reforms undertaken since 2017 which have profoundly transformed the country's economic model. On average, real GDP grew by 5.3% per annum over the 2017-2024 period. The government has earmarked a significant increase in investments to modernise airports, develop special economic zones, and build a USD 3 billion sustainable data centre. However, the state's strong footprint in the economy via public enterprises and state-owned commercial banks, which still hold 65% of banking assets, hampers competition and limits the emergence of a fully competitive private sector. On the one hand, some privatisations have been undertaken (Ipoteka, Agroexportbank, Poytakht), but preferential lending mechanisms are still widely used and accounted for 24.1% of loans in 2024, which hinders the optimal allocation of capital. In the private sector, foreign investment is on the rise, supported by economic reforms and an improved business climate. Major projects were completed in 2025, including a USD 2.4 billion wind farm in partnership with ACWA Power and an electric vehicle factory resulting from the collaboration between BYD and UzAuto Motors. At the same time, household consumption remains strong, supported by continued growth in real wages and significant remittances from the diaspora (10% of GDP in 2024), particularly from Russia. Strong growth in household income has contributed to a significant reduction in the poverty rate, which fell from 20.7% in 2024 to 16.6% in 2025. In addition, job creation has gained momentum, with annual employment growth estimated at 1.7%, exceeding the growth rate of the working-age population, estimated at 1% per year.

On the supply side, services are the main growth drivers, accounting for around 45% of GDP. Growth in services totalled 13% in 2024, driven by hotels, restaurants, transport and logistics services. Industry (32% of GDP), which is dominated by oil and gas, chemicals, textiles and automotive activities, is showing sustained growth thanks to demand for construction materials and manufactured goods. Agriculture (cotton, fruit, vegetables, rice, livestock) accounts for around 18% of GDP and employs 14% of the working population, although it slowed in 2024 when growth came in at 3.6% compared with 4.1% the previous year. The mining sector, focused on gold, copper and coal, is strategic, while growth in the oil and gas sub-sector is limited by the depletion of reserves.

Inflation is expected to continue its downward trajectory but still remains high owing mainly to increases in utility and transport prices. This is the result of a gradual reduction in fuel subsidies and the reform of electricity prices, which began in 2024 to reflect actual production costs and to rationalise public spending. These measures have been accompanied by the gradual elimination of certain tax exemptions, particularly on VAT. To mitigate the impact of energy price increases on vulnerable households, the government plans to provide them with direct assistance of 1 million Soms (approximately USD 80) per household in November 2025. Despite these tariff adjustments, inflation is expected to continue its downtrend thanks to tight monetary policy, fiscal tightening and the expected decline in transport costs. The central bank is targeting an inflation rate of 5% by the end of 2027, but this convergence is uncertain. The persistent weakness of the Som, which makes imports more expensive, rapid growth in domestic demand driven by rising incomes and population growth, and rigidities in certain sectors such as energy and transport are exerting sustained pressure on core inflation.

Conservative economic policy

Monetary policy remains restrictive to contain inflationary pressures. In March 2025, the central bank (CBU) raised its key interest rate by 0.5 percentage points to 14%. However, its effectiveness is limited by weak financial intermediation. The CBU continues to operate a floating exchange rate regime to prevent the re-emergence of a parallel dollar market. However, it is struggling to contain currency volatility against the Russian rouble, which is heavily influenced by international sanctions and the war in Ukraine.

In terms of the budget, despite modest deficits, public debt remains moderate, with a relatively favourable structure: a significant portion is external (nearly 60%) and denominated in foreign currencies, but it is mostly concessional and concentrated among official creditors. To reduce the deficit, the authorities are seeking first to cut back on the generous wage and social benefits of recent years, and then to step up their efforts to combat the informal sector in order to improve tax collection.

The current account deficit is expected to remain significant, reflecting heavy dependence on imports of capital goods, intermediate goods and finished goods. Gold remains the main export product, accounting for 44% of sales in 2024, followed by cotton (7%), fuels (6%) and agricultural products. Exports are expected to continue to grow in 2026, supported by a slight increase in cotton prices and strong demand for gold. The 10% customs tariff announced by the US in April 2025 is expected to have only a limited impact given the country's low exposure to the US market, but it could be affected indirectly by a slowdown in demand from its trading partners. Furthermore, there are strong suspicions that Uzbekistan is involved in circumventing sanctions against Russia by re-exporting Western products. Last, remittances from migrant workers, although significant, are not enough to balance the current account.

Authoritarian regime under a reformist façade

Domestic policy continues to be dominated by a strong concentration of power in the hands of President Shavkat Mirziyoyev, who was re-elected in July 2023 following a constitutional reform that extended his term to seven years and allows him to run again in 2030. In 2024, parliamentary elections strengthened the majority of the Liberal Democratic Party, the President's party. Despite rhetoric of openness and reform, the regime is an authoritarian one, with no real opposition or independent press, and civil society continues to be heavily repressed. The appointment of Saida Mirziyoyeva, the President's eldest daughter, as head of the presidential administration is fuelling speculation over a dynastic succession.

Uzbekistan is stepping up its efforts to diversify its international partnerships. The country is making progress in its process of joining the World Trade Organization (WTO), with 23 bilateral agreements already signed and 10 still in the process of being negotiated, and is aiming for full membership by 2026. This move has been accompanied by a rapprochement with the EU, as evidenced by the EU-Central Asia summit held in Samarkand in April 2025, during which a EUR 12 billion European investment plan was announced as part of its Global Gateway strategy. Uzbekistan is receiving particular attention after the opening of a regional office of the European Investment Bank in Tashkent. In addition, the joint declaration of March 2025 with Kyrgyzstan and Tajikistan put an end to their border disputes. At the same time, relations with Russia are essential, particularly in the energy sector (gas imports). An agreement signed at the end of 2024 provides for the construction of six Russian nuclear reactors by 2029. Joint military exercises (Hamkorlik-2025) also illustrate the security cooperation between the two countries. China is a major economic partner. Last, Uzbekistan is pursuing a balanced diplomatic policy, aiming to preserve its sovereignty while maximising the economic opportunities offered by its Western partners, without severing its strategic ties with Russia and China.

Last updated: October 2025