The economy of Uzbekistan continues to exhibit steady growth despite facing increased external uncertainties, according to a statement from the International Monetary Fund (IMF) following their consultations in 2025. In 2024, the real GDP growth of the country reached 6.5%, fueled by robust domestic demand. The IMF's analysis highlights that the current account deficit narrowed by 2.6 percentage points to 5% of GDP, thanks to a rise in remittances, high commodity prices, and a gradual decline in imports.
International reserves remain at adequate levels, and the consolidated government budget deficit decreased by 1.7 percentage points to 3.2% of GDP. This reduction reflects a decrease in energy subsidies and a more targeted approach to social spending. The IMF noted that the increase in gold prices helped offset a decline in VAT revenues, which were affected by high levels of VAT refunds.
Despite the government's efforts to reduce the budget deficit by spending less to cool domestic demand and curb inflation, expenditures in the state sector, including those by state-owned enterprises, still grew significantly. This increase in spending, coupled with higher external borrowing that exceeded established limits, meant that the overall level of government spending remained high, which weakened the intended cooling effect on the economy.
Inflation remains a concern, with a year-on-year rate of 10.3% reported in March 2025, attributed to increased tariffs on energy resources and regulated prices from the previous year. The IMF forecasts stable economic growth at 5.9% for 2025 and 5.8% for 2026, despite the heightened external uncertainty. The anticipated increase in global tariffs has contributed to this uncertainty, tightening global financial conditions that could impact Uzbekistan through external demand, commodity prices, and financial flows.
Looking ahead, the IMF expects that economic growth will continue to be supported by private consumption, investments, and ongoing structural reforms. The current account deficit for 2025 is projected to remain at 5% of GDP, with growth in gold exports and the consolidation of the public sector expected to offset declines in non-gold-related exports due to slower growth among trading partners.
Inflation is expected to decrease to slightly above 8% by the end of 2025, continuing a trend of further decline. The IMF has identified several external risks, including potential shifts in global trade policies, the ongoing effects of the war in Ukraine, deteriorating external financing conditions, and volatility in commodity prices. Internal risks include a possible increase in the budget deficit, rising borrowing levels, and weakening balance sheets in the banking sector.
The IMF has also highlighted potential opportunities for Uzbekistan, such as accelerating structural reforms, increasing capital inflows, and benefiting from rising gold prices. In a typical year-end adjustment, Uzbekistan increased government spending by 9.98 trillion soums (approximately $775.8 million), raising the total from 255.4 trillion to 265.4 trillion soums. The Legislative Chamber's consideration of these amendments took just nine minutes.
Additionally, the limit on external borrowing was raised from $5 billion to $7.3 billion. Following its consultations, the IMF provided several recommendations to the government and the Central Bank of Uzbekistan. These include reforming taxes on corporate profits and individual income, eliminating ineffective subsidies, and mitigating the impact of gold prices on budget expenditures.
The IMF also urged the acceleration of the privatization of state banks, cautioning against the retention of systemically important banks due to associated budget risks. Furthermore, the mission suggested that the Central Bank of Uzbekistan gradually widen the exchange rate band to ensure that the national currency reflects market conditions more accurately and serves as an effective buffer against external shocks.
Uzbekistan has made notable progress in market reforms but is encouraged to complete the transition period reforms. The IMF called for the swift adoption of a law on income declaration for civil servants and a shift from state intervention to market institutions and effective regulation.
In the first quarter of 2025, the economy of Uzbekistan accelerated its growth rate from 6.4% to 6.8%, driven primarily by a 10.8% increase in construction activity. The growth rate of industrial production remained stable at 6.5%. However, inflation in the first quarter rose from 1.7% to 2.1%, and the real growth of disposable income for citizens slowed from 11.2% to 9.8%. Additionally, the growth in retail services (12.6%), passenger turnover (4.3%), and freight turnover (2%) showed noticeable deceleration.
The IMF's insights into Uzbekistan's economic landscape underscore the balance the nation must strike between fostering growth and managing inflation, alongside navigating the complexities of external pressures and internal fiscal responsibilities. As the government implements the IMF's recommendations, the path ahead will require careful monitoring and strategic adjustments to sustain the momentum of economic progress.