World Bank assesses economic situation in Uzbekistan
The WB report provides data on the liberalization of the foreign exchange market, unification of the exchange rate, setting market pricing, as well as a reduction in the tax rate for both legal entities and individuals.
According to a World Bank report, investment growth and increased consumption were reflected in real GDP - from 4.5 percent in 2017 to 5.1 percent in 2018 and then to 5.3 percent year on year in the first quarter of 2019. It is also predicted that, with the support of reforms aimed at liberalizing the economy, by 2021 it could reach 6 percent.
Annual inflation peaked at 20 percent at the beginning of 2018, and then fell to 14.3 percent by December, which led to an average annual rate of 17.5 percent by 2018.
It is estimated that inflationary pressures will continue in 2019–2020. A number of reasons contribute to this:
- continued liberalization of administrative prices, including for energy and water;
- an increase in lending policies through state-owned banks to support investment growth;
- increase in wages of the population.
The import of machinery and equipment for the modernization of the production process and the import of consumer goods to meet consumer demand in 2018 increased the current account deficit.
Gross external debt is projected to decline slightly to about 39 percent of GDP by 2020.
Also, according to the bank’s report, the state budget deficit may amount to about 1 percent of GDP after a significant reduction in excise taxes, income and payroll taxes. Government debt will increase to around 25 percent of GDP in 2020.
Economic liberalization measures have eliminated some significant business restrictions, such as a lack of foreign exchange, high import duties and increased tax rates, the report said.
A series of measures that can change the current economic situation are also provided. These include:
- Improving the investment climate and increased access to credit;
- complete reform of tax administration;
- ensuring transparency of operations of the State budget;
- Reform of land use rights and property rights in the sectors of industry, services and agriculture;
- restructuring of monopolistic state enterprises and strengthening requirements for corporate governance and financial reporting;
- providing government support for export orientation (including ISO quality certification, reduction of export risks, diversification and accession to the WTO).
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