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- GDP (PPP):
- $171.7 billion
- 8.1% growth
- 8.2% 5-year compound annual growth
- $5,609 per capita
- Inflation (CPI):
- FDI Inflow:
Uzbekistan aspires to be an industrialized, high-middle-income economy by 2050, and the economy benefits from a highly educated workforce, an abundance of natural resources, and a relatively well-developed infrastructure system. However, gains in economic freedom following the dissolution of the Soviet Union have not been institutionalized, and the momentum for reform has dissipated.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 46.0 (down 1 point)
- Economic Freedom Status: Repressed
- Global Ranking: 166th
- Regional Ranking: 39th in the Asia–Pacific Region
- Notable Successes: Business Freedom and Fiscal Freedom
- Concerns: Investment Freedom and Financial Freedom
- Overall Score Change Since 2012: +0.2
Uzbekistan’s government has announced efforts to privatize hundreds of state-owned enterprises by 2017. However, corruption is rampant throughout the nation, and there is doubt that privatization processes will be open and transparent. Investment in many sectors is restricted, and foreign investors are not allowed to own land.
President Islam Karimov has been in power since the late 1980s and claimed to have won reelection in March 2015 with more than 90 percent of the vote. Karimov rose through the ranks of the Soviet-era State Planning Committee (Gosplan) and runs a command economy. 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.
Corruption is pervasive. The judiciary is subservient to the president, who appoints all judges and can remove them at any time. Court procedures fall short of international standards, and expropriation by powerful figures able to act with impunity is possible. Property ownership is generally respected by local and central authorities but can be subverted by the government. There is no general system for registration of liens on chattel property.
The top personal income tax rate is 22 percent, and the top corporate tax rate is 9 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals about 19.9 percent of total domestic income. Government spending has reached a level equivalent to 33.4 percent of GDP. The budget is in surplus, and debt is under 10 percent of GDP.
The regulatory system lacks transparency and clarity, and inconsistent enforcement of regulations injects considerable uncertainty into business decision-making. The labor market lacks flexibility, and employment in the informal sector is substantial. The government creates implicit subsidies by administering the prices of many basic staples, such as petroleum products and utilities, and by controlling interest rates.
Uzbekistan’s average tariff rate is 7.2 percent. Importation of goods is very costly and time-consuming. Foreign investors may not purchase land. State-owned enterprises operate in several sectors of the economy. The financial sector is subject to heavy state intervention. Along with the high costs of financing, the banking sector’s limited capacity for financial intermediation hurts the private sector.