Geopolitical Report ISSN 2785-2598 Volume 50 Issue 7
SpecialEurasia OSINT Unit
Executive Summary
This report examines Uzbekistan’s economic performance in 2024, focusing on trade dynamics, sectoral developments, and key geopolitical considerations. It highlights the country’s efforts to modernise its economy under President Shavkat Mirziyoyev’s leadership, supported by structural reforms and strategic international partnerships. Uzbekistan continues to balance its relationships with global powers, notably China and Russia, while navigating regional and domestic challenges.
Key risks include external dependencies, regional inflationary pressures, and potential instability in Karakalpakstan. The report, based on international and local sources and prior analyses by SpecialEurasia, outlines Uzbekistan’s economic trajectory and identifies scenarios that could influence its near- and medium-term outlook.
Information Background
Uzbekistan has pursued economic modernisation under President Shavkat Mirziyoyev, supported by legislative reforms aimed at improving governance and fostering growth. The country’s geographical position and participation in major initiatives such as China’s Belt and Road Initiative (BRI) further bolster its economic relevance.
In 2024, trading involved strong partnerships with key players such as China, Russia, and the European Union. The Ukrainian conflict, inflation in neighbouring countries, geopolitical competition in Central Asia, and Russia’s economic problems continue to affect the country’s economic climate.
Current Economic Analysis
Trade Performance
Uzbekistan’s foreign trade turnover reached $65.93 billion in 2024, a 3.8% year-on-year increase. Export growth of 8.4% elevated the total to $26.94 billion, with imports rising marginally by 0.8% to $38.98 billion. These trends contributed to a reduced trade deficit of $12.03 billion compared to $13.78 billion in 2023.
Exports
Key contributors to export growth included:
- Gold: Sales amounted to $7.48 billion, despite a decline of 8.3% compared to 2023. Renewed gold exports in December ($854 million) reinforced this sector’s role in economic stability.
- Agriculture: Agricultural exports, led by fruits and vegetables, reached $2.17 billion, a 22.4% increase, driven by a 32.5% surge in fruit and vegetable sales.
- Chemicals: Chemical exports totalled $1.68 billion, reflecting a 29.1% rise. Notable gains came from inorganic substances (+83%) and fertilisers (+6.3%).
- Energy Products: Gas exports grew by 18.4% to $627.6 million, while oil product exports rose by two-thirds, exceeding $567 million.
Imports
Imports totalled $38.98 billion, with the following trends observed:
- Machinery and Equipment: This category remained dominant at $13.48 billion, despite a 9.7% decrease. Significant increases occurred in energy generators (+16.9%) and communication devices (+19.3%).
- Fuel: Fuel imports surged by over 50% to $3.95 billion, driven by a 2.4-fold increase in gas imports and a 22.2% rise in oil and petroleum products.
- Food: Food imports rose by 5.7% to $3.69 billion, though spending on grain declined by 18.4%.
Key Trade Partnerships
Despite other trading partners, China remained Uzbekistan’s biggest trading partner, with trade reaching $12.48 billion, mainly in Chinese machinery and technology. Russia followed with $11.63 billion in trade, including a significant 11.7% increase in Uzbek exports. Kazakhstan, Turkey, and South Korea experienced lower trade activity, while Afghanistan, Kyrgyzstan, Tajikistan, and France showed trade surpluses.
Sectoral Highlights
- Industrial Goods: Exports of industrial products rose by 3.7% to $4.2 billion.
- Textiles: Textile exports decreased by 3.7% to $1.99 billion.
- Automobiles: Automotive exports, including parts, fell by 16%, totalling $414.5 million.
Risk Assessment
Economic Risks
- External Dependencies: Uzbekistan’s heavy reliance on trade and remittances from Russia and China exposes it to considerable risks. Economic downturns, especially in Russia, threaten Uzbekistan’s trade and remittance income (11% of GDP). Geopolitical tensions worsen these vulnerabilities, thus restricting diplomatic flexibility.
- Trade Constraints and Export Composition: Landlocked geography creates logistical trade diversification hurdles, while a raw-materials-focused export base (gold, cotton, copper) heightens commodity price risk. This limits Uzbekistan’s ability to cushion external shocks effectively.
- Inflationary Pressures: Regional inflation remains high, fuelled by monetary tightening in neighbouring countries such as Russia and Turkey. Rising energy prices and stabilising remittances domestically could decrease consumer spending, thus reducing the pace of economic expansion.
- Structural Weaknesses: Despite progress in privatisation and structural reforms, state control of key sectors and endemic corruption hinder economic competitiveness. Significant dollarisation and directed credit policies remain obstacles to sustainable economic liberalisation.
Political and Security Risks
- Domestic Stability: The situation in Karakalpakstan represents a latent threat to national cohesion. Failure to address grievances in this region risks undermining investor confidence and destabilising domestic governance.
- Geopolitical Balancing: Tashkent’s effort to maintain equidistance between major powers remains critical. Improved ties with Western partners risk provoking negative responses from Russia or China, potentially jeopardising Tashkent’s economic and political stability.
Risk Scenarios
- Economic Slowdown in Russia: A contraction in the Russian economy, combined with rouble depreciation, could reduce remittances, undermining household incomes and constraining GDP growth.
- Commodity Price Shocks: Declines in global prices for gold, cotton, or copper would negatively affect export revenues. Concurrent increases in energy import costs because of regional inflationary trends would exacerbate fiscal pressures.
- Instability in Karakalpakstan: Renewed tensions in this autonomous region could disrupt internal governance and deter foreign investment, particularly in critical infrastructure and energy projects.
- Trade Vulnerabilities: Continued dependence on raw material exports, coupled with logistical challenges linked to Uzbekistan’s landlocked geography, may stifle trade diversification efforts, leaving the economy exposed to global demand fluctuations.
Outlook
Structural reforms, privatisation efforts, and investments in renewable energy will propel Uzbekistan’s sustained economic growth in 2025. However, the confluence of external dependencies, inflationary risks, and internal vulnerabilities underscores the need for prudent economic management and strategic diversification. Steps to reduce corruption, improve our ability to compete, and increase trade will help us manage risks and stay strong.
Picture: The Flag of the Republic of Uzbekistan (Credits: Zahro designer, CC BY 4.0, via Wikimedia Commons)
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