Country Report Uzbekistan June 2009

Outlook for 2009-10

• The president, Islam Karimov, will retain a tight grip on power, with few prospects for democratisation or increased transparency.
• There are questions regarding Mr Karimov's health, and uncertainty over who will eventually succeed him is likely to persist.
• The relaxation of EU sanctions in October 2008 will encourage Uzbekistan to attempt to foster closer economic links with the West. However, ties with Russia and China will also remain strong.
• Real GDP growth will moderate over the forecast period, owing to a decline in export demand and remittances. The Economist Intelligence Unit forecasts real GDP growth of 2.5% in 2009, ahead of a pick-up to 3.5% in 2010.
• Inflation is forecast to slow from an estimated annual average of 14% in 2008, owing to lower import prices for food and fuel, but the extent of disinflation will be limited by rapid growth of the money supply.
• The current-account surplus is expected to decline to around 15% of GDP in 2009-10, as import demand falls in Russia, Uzbekistan's chief export market, and as remittance inflows decline.

Monthly review

• On May 26th two separate attacksresponsibility for which has been claimed by the Islamic Jihad Union (IJU)resulted in the deaths of a number of Uzbek police officers.
• Tensions with the Kyrgyz Republic have risen because of the outbreak of violence in late May. The border was closed for a number of days, and tensions have flared between border guards from both countries.
• The government maintains that the stimulus package that it announced in late 2008 will be enough to shield the Uzbek economy from the global downturn.
• Official data on real GDP report that the economy expanded by 7.9% in the first quarter of 2009. However, electricity output rose by just 1.9%, suggesting that official GDP growth rates are exaggerated.
• Inflation has accelerated slightly, but real incomes are reported to be rising at double-digit rates.
• Small, family-owned farms accounted for the bulk of agricultural output in the first quarter. Agricultural output rose by 5.7% year on year in this period.
• Export growth has slowed markedly, but imports continue to be sustained by state purchases for capital investment projects.

Source: Country Report

This report covers the following industry codes:
SIC Code: 10;60;70;49;20;47;37;65
NAICS Code: 212;52;72;22;11;311;48;336;53