Uzbekistan’s economy continued to grow at a healthy rate with GDP rising to 888.3 trillion Soum ($80.4 billion) in 2022, or 5.7% in real terms. The service industry (3.2%) was the main contributor to GDP growth, while the manufacturing (1.3%), agriculture (0.9%) and construction (0.4%) industries added the rest and net taxes on products decreased (-0.1%). Uzbekistan’s national currency Soum depreciated by 3.5% against the U.S. dollar. The country’s international reserves increased by $0.7 billion to $35.8 billion, and the public external debt rose by $2.9 billion to $29.2 billion. The government did not publish private external debt data. Higher food, energy and logistics costs caused by the Russian invasion of Ukraine resulted in higher 12.3% inflation in Uzbekistan. The Central Bank raised the key interest rate from 14% to 17% in March 2022 and then cut it back to 15% in July 2022 and to 14% in March 2023 as the negative impact of the Russia-Ukraine war on Uzbekistan’s economy was milder than expected and remittances to Uzbekistan surged by 2.1 times to $16.9 billion in 2022. The remittances include not only the earnings of Uzbek labor migrants abroad, but also comprised financial transfers by Russian citizens who relocated, some temporarily and some permanently, to Uzbekistan.

Table: key economic indicators, 2021-2022

(Source: State Statistics Committee, Central Bank)    

Uzbekistan’s trade turnover jumped 18% to $50 billion with $19.3 billion in exports and $30.7 billion in imports. Import growth (20.4%) continues to outpace export growth (15.9%) resulting in a higher trade deficit. Industrial goods ($4.4 billion), gold ($4.1 billion) and services ($4 billion) accounted for 65% of the exports. Uzbekistan’s import structure can still be explained by its ongoing industrialization and modernization policy: machinery and transport equipment (31.4%), industrial goods (18.8%), chemicals and similar products (13.8%).

Major Trade Partners (Uzbekistan official statistics, 2022):

• Russia, 18.6%
• China, 17.8%
• Kazakhstan, 9.2%
• Turkiye, 6.4%
• South Korea, 4.7%

In 2022 Uzbekistan’s trade with the United States remained almost unchanged at $436.8 million, establishing the United States as Uzbekistan’s 16th largest trade partner. Due to the relatively low volume of trade between the United States and Uzbekistan, major capital purchases, such as Uzbekistan Airways’ acquisition of U.S.-made aircraft for its fleet, can cause significant variances in bilateral trade from year to year.

Uzbekistan’s Constitution provides for a presidential system with separation of powers and a representative government. In practice, power is highly concentrated in the office of the president and the executive branch. Uzbekistan prepared for a Constitutional Referendum in 2022-2023. One of the proposed amendments, which was to deprive the autonomous Republic of Karakalpakstan of the right to secede from Uzbekistan via referendum, caused unrest in Karakalpakstan in July 2022. The government decided to recall this amendment. The leader of the unrest was sentenced to 16 years in prison. The Constitutional Referendum was held on April 30, 2023. The amendments, which included extension of the Presidential term from 5 to 7 years, were accepted in the referendum with over 90% in support. On May 8, 2023, the incumbent President Shavkat Mirziyoyev, who won re-election on October 24, 2021, with his second 5-year term ending in 2026, announced a snap election on July 9. He won the July 9 Presidential election with 87.05% of votes and will stay in power until at least 2030. After winning his first Presidential election in 2016, Mirziyoyev implemented a reform program to turn Uzbekistan from a closed, isolationist country to one eager to cooperate with its neighbors, as well as regional and global powers. The government started to implement reforms required for transition to a more transparent, competitive and market-based economy in 2017. The Development Strategy of Uzbekistan for 2022-2026 was adopted in January 2022.

Uzbekistan has signed bilateral agreements with 55 countries on the avoidance of double taxation. The U.S. Internal Revenue Service considers Uzbekistan to be one of the former Soviet republics now covered by a taxation treaty with the Commonwealth of Independent States (CIS), as the successor to the dual taxation treaty signed between the United States and the Union of Soviet Socialist Republics (USSR) (signed in 1973 and entered into force in 1976). However, the Government of Uzbekistan argues that this agreement cannot be considered in effect and has proposed signing a new double taxation treaty. In 2015, Uzbekistan and the United States signed the Intergovernmental Agreement to Improve International Tax Compliance with respect to the United States Information Reporting Provisions, commonly known as the Foreign Account Tax Compliance Act (FATCA). The FATCA agreement entered into force in July 2017. Uzbekistan has not become a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS).

Uzbekistan also has treaties providing most-favored-nation treatment with 47 countries. The governments of the United States and Uzbekistan signed a Bilateral Investment Treaty in 1994, but ratification documents have not been exchanged and the agreement never entered into force. In 2014, Uzbekistan joined the CIS Free Trade Zone Agreement. On December 11, 2020, Uzbekistan joined the Eurasian Economic Union (EAEU) as an observer. On April 9, 2021, the European Union accepted Uzbekistan as the ninth beneficiary of a General System of Preferences Plus (GSP+) trade arrangement, which removed tariffs on two thirds (6,200 titles) of the product lines covered by GSP in return for Uzbekistan implementing 27 ratified core international conventions on human and labor rights, environmental and climate protection, and good governance. On November 1, 2021, Uzbekistan became the first country to be admitted to the United Kingdom’s Enhanced Framework Generalized Scheme of Preferences, which allows zero import duty on more than 7,800 products made in Uzbekistan. The country has accelerated its World Trade Organization (WTO) accession negotiations as it plans to double its exports of finished products within the next three years and views WTO accession as crucial to achieving this goal. On August 15, 2023, the President signed a decree to amend some national legislation to harmonize it with the WTO agreements.

Uzbekistan signed an Agreement on border demarcation with Kazakhstan in December 2022 and completed the border demarcation process with Kyrgyzstan in January 2023. Thus, Uzbekistan has resolved all border issues with two neighboring former Soviet Union countries after gaining independence in 1991. Violent extremist groups in Central Asia, including the Islamic Movement of Uzbekistan, al-Qaida, and DAESH, have not represented a threat to foreign businesses in Uzbekistan in recent years. The country has good relations with all its neighbors, including Afghanistan. Although it has not formally recognized the Taliban government, Uzbekistan has called for Afghanistan’s assets held abroad to be unfrozen. On February 2, 2021, Uzbekistan, Pakistan and Afghanistan signed a roadmap on the construction of a planned 573-km-long Mazar-e-Sharif-Kabul-Peshawar railway and sent a joint letter to international financial institutions (IFIs) requesting a $4.8 billion loan for the railway. However, the Taliban’s takeover of Afghanistan in August 2021 greatly complicated the search for financing. Nonetheless, the three countries are still holding talks on implementation of the project. The railway could grant the Central Asian countries access to the Indian Ocean and significantly expand the region’s access to global markets.

In March 2022 Afghanistan started building the Qosh Tepa canal to divert a third of the water in the Amudarya River – one of the two rivers supplying water to Uzbekistan – to irrigate Afghanistan’s dry northern plains. After the Uzbekistan-Afghanistan meeting in March 2023, Afghanistan’s so-called deputy prime minister stated that the project will be implemented on the basis of mutual understanding with Uzbekistan and that Uzbekistan had expressed readiness to work together with Afghanistan’s technical teams to improve the efficiency of the Qosh Tepa Canal project along with other infrastructure projects.

With an estimated population of 36.4 million, Uzbekistan has the foundation needed to become a regional economic powerhouse: a dynamic, literate, and entrepreneurial population – the largest in Central Asia; relatively good infrastructure; and the largest potential consumer market in the region. The Cotton Campaign, a global human rights coalition, ended its thirteen-year boycott of Uzbek cotton in March 2022, reporting it had found no systemic or systematic government-imposed forced labor during the 2021 cotton harvest. The government’s declared economic policy prioritizes the attraction of private investments through the improvement of Uzbekistan’s business climate, privatization, and liberalization of foreign trade. Unfortunately, external factors now add uncertainty and pose risk to the country’s economic outlook. The Russian war in Ukraine has affected the political and economic landscape of the region. Being a double-landlocked country, Uzbekistan has traditionally relied heavily on transportation corridors through Russia. Although Russia continues to be Uzbekistan’s largest economic partner, its destructive policies are motivating the GOU and local businesses to explore new markets and develop transport routes that bypass sanctioned jurisdictions. The Trans-Caspian International Transport Route linking China and the European Union through Central Asia, the Caucasus, Turkey, and Eastern Europe has increased in importance. In September 2022, Uzbekistan, Kyrgyzstan and China signed an agreement to conduct a feasibility study on a $4.5 billion China-Kyrgyzstan-Uzbekistan railway project, which has been discussed for 20 years. The study was completed in the first half of 2023 and the railway construction is expected to start in late 2023 or early 2024.

This year Fitch Ratings and S&P affirmed Uzbekistan’s credit rating at BB- stable outlook while Moody’s upgraded its rating from B1 positive outlook to Ba3 stable outlook. After his July 9, 2023, election win, President Mirziyoyev declared the goal of increasing Uzbekistan’s GDP to $160 billion (from its current level of $80 billion) by 2030.

Political Environment

Visit State Department’s website for background on the country’s political and economic environment.