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The Predicted 6% Increase in Uzbekistan’s Economy

Uzbekistan’s Economy
Uzbekistan, a landlocked country in Central Asia and one of the few countries in the world to avoid a severe economic downturn in the fiscal year 2020, received a financial projection from the World Bank indicating that Uzbekistan’s economy should improve about 6% in total in the fiscal year 2021. Here is some information about the country’s economy including what contributes to its growth.

Uzbekistan’s Economic Foundation

Uzbekistan’s economy is heavily reliant on agriculture. About 27% of the population works in agriculture, a sector that accounts for 28% of the nation’s gross domestic product. The most exported crop is cotton, which is a water-intensive crop. Most of Uzbekistan’s farming land requires heavy irrigation through the country’s “system of pumps and canals.” Uzbekistan, on average, produces more than 700,000 tons of cotton per year. In 2020, this brought in $78.87 million to Uzbekistan’s economy. Other agricultural products include livestock or seedlings. Altogether, Uzbekistan earned $15 billion from the exportation of goods alone.

What Changed in 2020?

Despite the difficulties involved in trade due to the COVID-19 pandemic, Uzbekistan’s agricultural sector remained steady and robust. The impact of the pandemic on unemployment was minimal and poverty has already begun reverting to its pre-pandemic levels. At the beginning of 2020, the unemployment rate was about 9% increasing to 11% by the end of the year. Since then, the poverty rate has re-stabilized at about 9.8% for the first three quarters of 2021. Experts expect this upward trend to continue during 2021.

In 2020, one of the reasons the agricultural sector was not as harshly affected as it was in other nations is because Uzbekistan began efforts to update farming technologies and develop a primarily agricultural export-oriented market to further the agricultural sector’s contributions to the nation’s GDP. In August 2021, a plan was approved to transform the agricultural sector in partnership with the United States Agency for International Development (USAID).

The developmental plans will expand resources available for those working in agriculture and expand job accessibility in Uzbekistan. In turn, with the expanded job accessibility and resource expansion, the poverty rate in Uzbekistan has a significant chance of decreasing further. As agriculture remained a stable sector for business in 2019 and 2020, Uzbekistan’s government saw the opportunity for expansion and reorganization. This plays a significant role in the expected increase in Uzbekistan’s GDP.

Uzbekistan and the World Bank

The World Bank has partnered with Uzbekistan for decades. It tracks Uzbekistan’s overall poverty rate, economic growth and more. Uzbekistan’s partnership with the World Bank involves “providing technical advice on how to improve the country’s economic and financial management” with a focus on “private sector growth, agricultural competitiveness and modernization and improved public service delivery.” One of the aims also includes transitioning to “a market-based agriculture system.” This goal is also the primary aim of the Uzbekistan-USAID agricultural transformation strategy outlined for 2020-2030.

Throughout this partnership, the World Bank and Uzbekistan have developed policies to do away with child labor but expand job opportunities. Positively, Uzbekistan noted significant increases in the nation’s GDP since the partnership began.

In October 2021, the World Bank Vice President Anna Bjerde met with Uzbekistan’s president to discuss the partnership between the organization and the country and see how the World Bank can help Uzbekistan fulfill its goal of expanding into the market-based agriculture system. The system can help farmers operate more business ventures and expand their markets without many restrictions, leading to more job opportunities.

The Potential of a New Market

Much of the projected economic growth stems from the change in agriculture marketing in Uzbekistan. The country’s income from cotton exports and trade decreased to about $3 million in 2020, even though, in 2019, this amount was about five times higher. Despite this staggering drop, Uzbekistan’s economy remained fairly untouched.

Uzbekistan’s economy hardly shrank, which means a better chance for significant improvement this fiscal year. Furthermore, the increasing rate of vaccinations globally and the opening of markets for trade increase the potential for Uzbekistan’s economy to re-expand fully and continue expanding.

Positive projections for Uzbekistan’s economy provide confidence to Uzbekistan and will attract foreign investors. The positive projection increasing four points from the previous projection, as well as the expansion of the free agriculture-market system, potential job opportunities and the chance for more foreign investments, all point toward a positive 2021 for Uzbekistan and its economy.

– Clara Mulvihill
Photo: Flickr

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Poverty in Uzbekistan

Poverty in Uzbekistan

Poverty in Uzbekistan is dropping. Though rarely seen making headlines, the country of Uzbekistan has seen sustained growth over the past several years. If trends continue, the country is expected to be on its way towards becoming a successful, developed country free from extreme poverty in the near future. Below are ten facts about poverty in Uzbekistan and the progress to alleviate it.

10 Facts About Poverty in Uzbekistan

  1. In a population of just over 31 million, 13.7% live below the poverty line. This is down from nearly 30% in 2001.
  2. While Uzbekistan has experienced increased urbanization in recent years, 75% of those living in extreme poverty in Uzbekistan still live in rural areas.
  3. Child health remains a hurdle to overcome, with 34 out of every 1,000 babies dying before their first birthday. In comparison, only six babies die in the first year of life on average in the U.S.
  4. Poverty in Uzbekistan is contradicted by the overall economic growth of over 8% in the past five years.
  5. In 2011, The World Bank reclassified Uzbekistan from a low-income country to a lower-middle income country. This indicates the country is making sustained progress toward development.
  6. Between 2001 and 2013, real wages doubled as job prospects improved.
  7. Education, often a prerequisite for growth and poverty reduction, has risen to 99.8% as of 2013.
  8. Foreign trade has quadrupled in the past 15 years, helping to improve household incomes across the country.
  9. Recent investment through The World Bank has provided more than 60,000 farmers with training in improved crop protection and pest control. This has allowed farmers to improve their crop yield, thereby increasing their income and reducing poverty.
  10. To further reduce poverty in Uzbekistan and improve living conditions, the country has set a goal of becoming an industrialized, upper-middle income country by 2030.

With steady growth and economic improvements, Uzbekistan has positioned itself to become a successful, developed nation in the near future. As these improvements continue, poverty in Uzbekistan is anticipated to decline and living standards should significantly improve across the country.

– Sara Christensen

Photo: Flickr