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Successfully investing in Uzbekistan

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​​​​​​last updated on 18 July 2024 | reading time approx. 4 minutes

 

   

 

How do you assess the current economic situation in Uzbekistan?

In recent years, Uzbekistan has carried out comprehensive reforms, liberalized some sectors of the economy and improved prospects for the private sector. In 2023, the government took several important steps, such as establishing an independent energy regulator, introducing energy tariff reforms, restructuring the state-owned railroad company, privatizing a major chemical plant and a bank, and unbundling a leading state-owned chemical company to promote competition. Uzbekistan has also opted for greener development by setting more ambitious environmental targets, introducing a new pollution control system and creating a national energy system. 

The government continues to invest in new green energy sources and is taking further measures to improve the efficiency of electricity and water use and to adapt to climate change. Given the high population growth and the annual influx of young people into the labour market, the country's economic growth should focus on active job creation. 

Further reforms, including further market liberalization and more competition, are essential for this. Key strategies include reducing the economic influence of state-owned enterprises, strengthening land rights, deregulating the telecommunications sector and commodity trade, and reducing high trade costs by improving logistics and connectivity. In addition, more investment in workforce training is needed to accelerate job creation and productivity growth. Overall, the Uzbek economy is recovering rapidly. In the first three quarters of 2021, real GDP (Gross domestic product)grew by 6.9 percent year-on-year, driven by the services sector, manufacturing and mining. Investment activity is also starting to recover: Fixed asset investments increased by 5 percent year-on-year in the first three quarters of 2021.

​Uzbekistan
2023​
​Population
36.2 million​
​GDP ($)
​90.9 billion
​GDP per capita ($)
​2,510.1
​Life Expectancy at Birth
​70.9 years

The economic situation in Uzbekistan is therefore positive overall but requires further reforms and investment for sustainable growth and development.

   

How would you describe the investment climate in Uzbekistan? Which sectors offer the largest potential?

Investment climate​​

Uzbekistan is an emerging economy that is increasingly attracting the interest of international investors. Since 2017, the country has been implementing a comprehensive reform program to liberalize the economy and create a favourable climate for private investors. In 2022, the country's GDP amounted to 888.3 trillion sums (80.4 billion US dollars), which corresponds to real growth of 5.7 percent. However, despite the improved legal framework, government support remains an important prerequisite for business success, as contract enforcement and judicial decisions in the event of commercial disputes are weak.

Promising industries​​​

Uzbekistan is rich in minerals and metals, including gold, and has a textile and service industry. Both agriculture and manufacturing contribute equally to the economy, together accounting for half of the country's GDP. In recent years, however, the economy has diversified in favour of the manufacturing and technology sectors. The most important agricultural products include cotton, fruit, vegetables, livestock, grain, wool and silk. In the field of energy, Uzbekistan is actively developing green energy. Notably, solar energy projects with a capacity of 1,000 MW have already been implemented and others are in the tendering phase, attracting interest from investors from Saudi Arabia, the United Arab Emirates, China, Japan and Korea. Uzbekistan thus offers great opportunities for companies from various sectors that can use its demographic and resource-related advantages for strategic development.


What challenges do German companies face during their business ventures into Uzbekistan?

German companies wishing to do business in Uzbekistan can face a number of challenges. However, the specific issues may vary depending on the industry and business. Below are some general challenges that German companies may face:
  • Regulatory barriers: Uzbekistan continues to work on improving its business climate, but there are still some regulatory obstacles.
  • Changes in economic policy: Uzbekistan's economic policy is constantly evolving and changes may affect business operations.
  • Cultural differences: German companies may encounter cultural differences when conducting business in Uzbekistan.
It is important to note that Uzbekistan is actively working to overcome these issues and trying to create a favourable environment for foreign investors. German companies interested in doing business in Uzbekistan should carefully examine the local conditions and legal requirements.

 

​How far has Uzbekistan progressed with digitization​

Digitalization is being actively promoted in Uzbekistan. Here are some important aspects of this process: Uzbekistan has adopted a number of strategies for digital transformation, including the "Comprehensive Program for the Development of the National Information and Communication System of the Republic of Uzbekistan for 2013-2020", the "Digital Uzbekistan Strategy - 2030" and the "New Development Strategy for Uzbekistan for 2022-2026".

Uzbekistan has taken significant steps to improve its digital infrastructure by investing substantial resources in ICT development. In the field of digital skills and innovation in public services, Uzbekistan advanced 65 places in the 2022 international ranking.

Significant progress has been made since the launch of the country's central e-government service, the "Unified Portal of Interactive Government Services". Uzbekistan is also taking measures to train highly qualified specialists for the digital economy and prepare the population for the conditions of the digital economy.
All these achievements are the result of Uzbekistan's active efforts in the field of digitalization.

 

In your opinion, how will Uzbekistan develop?

Uzbekistan's development has been stable in recent years and the outlook for the country is encouraging. The government is implementing a series of reforms to improve the investment climate, diversify the economy and promote the development of the private sector. Uzbekistan's economic growth is expected to reach 5.5 percent in 2023 and remain at this level in 2024 and 2025. Uzbekistan has adopted the "New Uzbekistan Development Strategy for 2022-2026", which includes a number of initiatives and goals to improve all aspects of the country and society. Uzbekistan is actively adapting to climate change, which can help accelerate economic growth and improve living standards. Uzbekistan is also actively addressing environmental issues, including the transition to a green economy and the use of renewable energy sources. One of the main priorities of the strategy is to improve the business environment. These reforms are already bearing fruit and are expected to have a positive impact on the country's economy in the coming years.​​​

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