Country Report Uzbekistan March 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. 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 17.5% of GDP in 2009-10 as import demand falls in Russia, Uzbekistan's chief export market, and as remittance inflows decline.

Monthly review

• Uzbekistan has reached an agreement with the US to allow non-military supplies to transit Uzbek territory on the way to Afghanistan.
• Despite closer official ties with the US, Western governments and human rights organisations continue to criticise Uzbekistan's record in this area.
• The local currency, the som, has continued its trend of depreciation against the US dollar. However, the pace of depreciation slowed in the first two months of 2009.
• The authorities have continued to announce new policy measures increasing state intervention in the economy, reflecting official concerns that the global economic downturn will have a severe effect on the domestic economy.
• Official figures report real GDP growth of 9% in 2008. This represents a slowdown compared with earlier in the year, but data on sectoral growth imply an acceleration, highlighting the unreliability of official data.
• Industrial output expanded by 12.7% in 2008, according to official figures. Most sectors expanded robustly, albeit at slower rates than in 2007.
• Trade data for 2008 show an expansion in exports of goods and services of 29%, to US$11.6bn. Imports rose by 9%, to US$5.7bn. The balance on trade in goods and services recorded a surplus amounting to US$5.9bn.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;1
NAICS Code: 52;11