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- GDP (PPP):
- $95.2 billion
- 8.3% growth
- 8.7% 5-year compound annual growth
- $3,302 per capita
- Inflation (CPI):
- FDI Inflow:
Uzbekistan’s economic freedom score is 46, making its economy the 162nd freest in the 2013 Index. Its score is 0.2 point higher than last year, reflecting advancements in business freedom, control of government spending, and labor freedom. Uzbekistan is ranked 35th out of 41 countries in the Asia–Pacific region, and its overall score is much lower than the world average.
Uzbekistan’s record on economic reform has been dismal, and more broadly based development continues to be severely constrained by long-standing institutional weaknesses that undermine the foundations of economic freedom. The inefficient legal framework remains highly vulnerable to political interference, and corruption further undermines the already fragile rule of law.
In other key policy areas, heavy state involvement in the leading economic sectors has dampened private-sector dynamism and led to economic stagnation in non-energy sectors. The government restricts foreign investment to a few handpicked partners, while the state-controlled financial system limits credit access to political favorites. Burdensome and opaque regulatory systems further limit private-sector activity.
Authoritarian President Islam Karimov has been in power since the late 1980s. Relations with the United States and the European Union have improved due to cooperation in fighting Islamist terrorism. Uzbekistan has guaranteed the U.S. and Germany limited access to the Termez air base for operations in Afghanistan. Violations of human rights remain a serious concern. Uzbekistan has suspended its participation in the Russia-dominated Collective Security Treaty Organization. The economy depends heavily on natural gas, oil, gold, uranium, and cotton exports, and exports of gas to China are now in the range of 2 billion–4 billion cubic meters (BCM) annually. Uzbekistan has secured a $2.54 billion loan from a consortium of private banks to build the Ustyurt gas and chemical complex, which plans to produce 4.5 BCM of gas in 2016.
Property ownership is generally respected by local and central authorities, although it can be subverted by the government. The legal framework remains poor, and the executive influences the judiciary. There is no general system for registration of liens on chattel property. Court procedures fall short of international standards, and expropriation by powerful figures able to act with impunity is possible. Corruption is rampant.
The top income tax rate is 22 percent, and the top corporate tax rate is 9 percent. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden equals about 20.4 percent of total domestic income. Government spending has reached a level equivalent to 32.8 percent of GDP. The budget is in surplus, and debt is under 10 percent of GDP. Fiscal risks have grown due to fears of a decline in energy revenues from Europe and Russia.
Despite some progress, the regulatory system lacks transparency and clarity, and inconsistent enforcement of regulations injects considerable uncertainty into business decision-making. The business start-up process has been streamlined, but completing licensing requirements remains time-consuming. The labor market lacks flexibility, and employment in the informal sector is substantial. Monetary stability has worsened as inflation has increased.
The trade-weighted average tariff rate is somewhat high at 6.9 percent, and non-tariff barriers interfere significantly with trade freedom. The investment regime, lacking transparency and efficiency, remains unfavorable to dynamic investment growth. 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.