he economy of Uzbekistan in the 1st half of the year maintained high growth dynamics and remained resistant to changes in the unstable external environment. According to the Statistics Agency, the gross domestic product (GDP) of Uzbekistan increased by 5.6% in the first 6 months of this year, which is higher than in the same period of 2022 (5.4%).

Despite the persistence of geopolitical instability, the economic situation in neighboring countries in January-June of this year was generally favorable.

In Kazakhstan, the economy grew by 5%, in Kyrgyzstan by 3.9%. In China, GDP growth was 5.5%. According to the estimates of the Ministry of Economic Development of the Russian Federation, Russia's GDP grew by 0.6% in January-May compared to the same period of the previous year.

Inflation in Uzbekistan continues to slow down and at the end of 6 months shows the lowest rates in the last 5 years. In January-June, prices increased by 3.5%, while in the same period in 2022 by 6.5%. In annual terms, inflation slowed to 9% (in June 2022 – 12.2%). Food inflation slowed from 8.9% in January-June 2022 to 4.1% over the same period this year.

Similarly, the growth of prices for non-food products slowed from 5.8% to 3.1%, for paid services from 3.3% to 2.9%. Investments in fixed assets for 6 months increased by 7.9% (in January-June 2022 – 6.6%).

The main inflow came from non-centralized investments, the growth rate of which was 8.7%. Of these, investments at the expense of enterprises increased by 15.8%, funds of the population – 8.7%, loans from commercial banks and other borrowed funds – 36.5%. In addition, there is a double-digit dynamics in attracting foreign direct investment at the level of 21%.

Investments from centralized sources in the first half of the year increased by 2.4%, in particular, at the expense of budget funds by 3.6%. Foreign investments and loans guaranteed by the government increased by 6.9%.

In general, the share of centralized investments in the investment structure decreased from 13% in January-June 2022 to 12.3%, the share of non-centralized ones increased from 87% to 87.7%, respectively. It should be noted that the share of investments directed in the manufacturing industry increased to 30.2% (28.9% in the 1st half of 2022), the mining industry to 8% (6.1%).

Industrial production in the first 6 months grew at a faster pace compared to the same period in 2022 – 5.6% versus 5.1%, respectively.

The main factors of economic growth are due to the timely adoption of urgent measures to support entrepreneurs, as a result of which the growth of the manufacturing industry amounted to 6.3% (5.9% for the first half of 2022), the mining industry by 0.2% (-0.5%).

Also, power supply grew the most dynamically among the industrial sectors by 9.9%, which, however, is lower than in January-June 2022 (an increase of 14.7%).

In addition, in the 1st half of this year, the sectors that were declining last year also grew. In particular, the mining industry experienced a slight increase of 0.2% (in January-June 2022, a decrease of 0.5%), the water supply, sewerage, waste collection and disposal sector grew by 3.6%, against a decrease of 11.6% in the first 6 months of 2022.

The dynamics in the construction sector slowed down slightly from 5.1% in January-June 2022 to 4.8% for the same period this year. In agriculture, in particular in crop production and animal husbandry, there is an acceleration in the growth rate of output to 3.8% (in January-June 2022 – 2.7%). At the same time, the growth rates of forestry and fisheries have slowed down somewhat.

The volume of market services rendered in the first 6 months of 2023 increased by 12.3% (for the same period in 2022 – 14.5%). In terms of sectors, communication and information services grew at double-digit rates by 22.9%, financial services by 22.7%, education services by 19.5%, accommodation and food by 10.4%. In the transport sector, the volume of services increased by 8.6%. The growth rates of cargo turnover and passenger turnover have slowed down.

There is a slowdown in the growth rate of retail turnover from 9.9% in January-June 2022 to 6.9% for the same period in 2023. Foreign trade turnover in the 1st half of the year increased by 19.4% to $29.2 billion. Exports increased by 23% to $12.1 billion, imports by 17% to $17 billion.

The export growth is due to an increase in the supply of machinery and transport equipment to foreign markets by almost 60%, gold by 47%, services by 41%, food by 33%, various finished products by 25%. At the same time, exports of non-food raw materials decreased by 26%, fuel and energy resources by 20%.

In imports, an increase in supplies to Uzbekistan is noted for fuel and energy products by 73%, machinery and transport equipment by 30%, chemical products by 10%.

In general, the main trends of the 1st half of the year were strengthening macro stability and reducing the impact of negative factors on the economy, supporting positive growth dynamics of economic sectors, strengthening investment activity. Uzbekistan's economy is expected to maintain stability and a dynamic pace of development by the end of the year.

Source: The Diplomat In Spain

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Kazakhstan, the giant of Central Asia, has been bolstering its connections with neighboring nations and major economies across Asia and Europe

The global trade landscape is quickly evolving as international supply chains reconfigure themselves following the retreat of globalization, driven by the deepening bifurcation of the international arena between U.S.-led and China-led subsystems. Such a time of rapid change calls for future-oriented leadership informed by strategic foresight and diplomatic acumen. This is particularly true for countries that may find themselves in delicate geo-economic positions, such as Central Asian states.

Investments in infrastructure are essential for the economic growth of these countries.

According to the Asian Development Bank’s (ADB) 2017 report, “Meeting Asia’s Infrastructure Needs,” infrastructure investment needs in Central Asia increase to $38 billion annually, or 7.8% of the region’s gross domestic product (GDP) if those necessary for climate change mitigation and climate change adaptation are included.

Responding to these challenges, one central Asian country – Kazakhstan – managed to position itself as a pivotal player on the Trans-Caspian International Trade Route (TITR), a project reshaping trade dynamics between Asia and Europe through a network of railways and seaways to facilitate faster and more efficient trade. The TITR is a rail freight corridor linking the People’s Republic of China and the European Union through Central Asia, the Caucasus, Türkiye and Eastern Europe. The project is expected to bring significant economic benefits to the country, boosting trade and attracting foreign investment. It will open new avenues for economic growth, create jobs and foster innovation. It has the potential to make Kazakhstan a highly attractive destination for businesses seeking to install themselves in Central Asia to tap into the vast Asian markets.

Beyond economics, the TITR has already elevated Kazakhstan’s political stature. The EU and European Bank for Reconstruction and Development (EBRD) have formally recognized this shift. At a recent joint conference in Almaty, with wide participation from many Central Asian players, these two entities selected what they call the “Central Trans-Caspian Network,” running through southern Kazakhstan, as the most sustainable of three container-transit options for linking Central Asia and Europe. The EU and EBRD foresee a sevenfold increase in transit volumes from 18,000 “20-foot equivalent units” (TEUs, a standard industrial measure) to 130,000 TEUs by 2040. The EU and EBRD’s study is country-specific and proposes seven soft connectivity measures and 32 hard infrastructure investment needs across five Central Asian countries. The study provides for such practical measures as digitalization of transport documents, improvement of interoperability, enhancement of the public-private partnership (PPP) environment, facilitation of trade, liberalization of markets, improvements to tariff-setting mechanisms and the increase of funding for asset maintenance. Country-specific priority investment needs for Kazakhstan include Almaty-Khorgos and Aktau-Beyneu railway double-tracking, expansion of several terminals and railway stations, and Aktau port capacity expansion, among other projects.

The involvement of the EBRD in this study also represents a “seal of approval” for international financial institutions to participate in building out the corridor. The detailed EU-EBRD work identifies specific projects in specific geographical regions and already represents a preliminary feasibility study for them. It outlines key actions for developing the network and its integration with the EU’s Trans-European Transport Network (TEN-T), which covers all 27 EU member states.

The last 20 years have brought significant changes to Central Asia’s economic development, with the hydrocarbons sector, in particular, giving these economies a new shape, for example, in the strategic importance of Kazakhstan and Azerbaijan in world energy markets. Kazakh President Kassym-Jomart Tokayev stressed the need for economic reforms and growth, and noting a record growth of investment to $28 billion in the past decade, he reiterated the need for flexibility and adaptation to the country’s realities, proposing to ease the tax burden for new projects.

Playing a central role in a project of such scale and significance will enable Kazakhstan to reinforce its position as a key player in regional affairs. The country has already demonstrated its ability to foster cooperation and manage complex projects, establishing its reputation as a reliable and influential partner in global trade initiatives.

The Central Asian giant has been strengthening its ties with neighboring countries and major economies in Asia and Europe. The TITR’s implementation will further accelerate this trend. It is not just about facilitating trade but about building long-term, mutually beneficial relationships. As a key link in the TITR, Tokayev’s Kazakhstan is becoming not only a participant in global trade but also a significant influencer. The TITR promises long-term benefits for Kazakhstan, including sustainable development and increased regional cooperation. By promoting trade, it encourages the efficient use of resources and the adoption of sustainable practices. The shared interests and mutual dependencies that the TITR has already fostered make Kazakhstan a regional development and cooperation leader.

The TITR thus manifests the country’s strategic vision, boosting Kazakhstan’s economy and elevating its status not just on the regional but on the global stage. The country has already progressed significantly on an initiative known as “Digital Kazakhstan,” which seeks to transform how citizens, businesses and government bureaus interact. The strategy employs modern technologies like AI, 5G and Smart City to boost R&D, e-commerce, venture financing and fintech development.

Since Tokayev assumed power, Kazakhstan has undergone several reforms aimed at developing an entrepreneurial culture, attracting investments in the tech industry, and laying the foundation for Kazakhstan to serve as a technological hub in Central Asia.

Source: Daily Sabah

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Prime Minister Alikhan Smailov signed a decree on approval of the comprehensive action plan to combat the shadow economy for 2023-2025, the Prime Minister’s press service reported on July 26.

By 2025, Kazakhstan plans to reduce the shadow turnover in wholesale and retail trade to 5%, which stood at 6.7% last year. The government intends to bring this figure in transport and warehousing to 2.4% from 3.2% recorded in 2022.

The plan, drawn by Kazakhstan’s Financial Monitoring Agency and government stakeholders, includes systemic measures to improve tax and customs administration, ensure effective competition and budget distribution, and protect the population from illegal businesses.

These actions will make customs inspections more effective, optimize customs procedures and develop additional measures for administrative offenses.

The plan compiled as part of the President’s election program provides for reducing informal employment and suppressing illegal activities. Kazakhstan is set to increase the share of small and medium-sized businesses in the GDP from 36% in 2022 to 37.5% in 2025.

Source: Astana Times

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