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- GDP (PPP):
- $187.9 billion
- 8.0% growth
- 8.1% 5-year compound annual growth
- $6,068 per capita
- Inflation (CPI):
- FDI Inflow:
Overall economic freedom in Uzbekistan has been held back by corruption and government intervention in various aspects of the economy. While structural reform has been uneven, recent efforts have improved the investment climate to some extent. An online one-stop shop to streamline business regulation, introduced in 2015, has improved the entrepreneurial environment.
The government has announced a program to privatize approximately 1,200 state-owned enterprises by the end of 2016. More than 300 were privatized during the first half of the year, but there is doubt regarding the transparency of this process. Uzbekistan also reduced its business corporate tax rate from 9 percent to 7.5 percent in 2016.
Islam Karimov ruled the country with an iron fist from the late 1980s until his death in 2016. He never reformed the highly subsidized, Soviet-era command economy. Karimov was succeeded by former prime minister and current President Shavkat Mirziyoyev, who committed to policy continuity but has shown some willingness to reform. Uzbekistan is dry and landlocked; 11 percent of the land is cultivated in irrigated river valleys. More than 60 percent of the population lives in densely populated rural communities. Uzbekistan is the world’s fifth-largest cotton exporter and sixth-largest producer, but unsound cultivation practices have degraded the land and depleted water supplies. The economy also relies on natural gas and gold exports.
Property ownership is generally respected, but it can be subverted by the government. There is no general system for registering liens on chattel property. Police, security services, and judges interpret the laws as they choose or according to political dictates, leaving little recourse to appeal. Corruption is pervasive. Uzbekistan was ranked 153rd out of 168 countries and territories surveyed in Transparency International’s 2015 Corruption Perceptions Index.
The top personal income tax rate is 22 percent. The top corporate tax rate has been cut to 7.5 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals 19.7 percent of total domestic income. Government spending has amounted to 33.6 percent of total output (GDP) over the past three years, and budget surpluses have averaged 1.8 percent of GDP. Public debt is equivalent to 10.7 percent of GDP.
The regulatory system suffers from a lack of transparency and clarity, and regulations are enforced inconsistently. The labor market lacks flexibility, and regulations undermine dynamic employment growth. The government effectively subsidizes many basic staples. It also controls interest rates and in 2016 imposed strict limits on the amount of hard currency that Uzbek citizens may withdraw while traveling abroad.
Trade is moderately important to Uzbekistan’s economy; the value of exports and imports taken together equals 43 percent of GDP. The average applied tariff rate is 6.6 percent. All land is owned by the government. Foreign investment is screened, and state-owned enterprises distort the economy. The financial sector is subject to heavy state intervention. The high cost of financing remains a key barrier to development of the private sector.