Central Asian economies are expected to grow by at least 5.2 per cent on average in 2023 and will continue to grow next year thanks to the relocation of businesses and individuals from Russia, improvements in governance, increased commodity exports, and the reopening of China. This is according to the European Bank for Reconstruction and Development’s latest regional outlook.
The report notes that Central Asian economies “have proven resilient to adverse geopolitical headwinds related to Russia’s war on Ukraine.” Most economies in the region have strengthened their trade cooperation with Russia, serving as intermediaries and supplying their own products into the vacuum created by the withdrawal of international firms from the Russian market.
Remittances to Central Asia from abroad also increased significantly, boosting banks' profits. Meanwhile, labour remittances, as the EBRD notes, have also increased, fuelled by the sustained labour demand in Russia and a stronger rouble.
The relocation of Russian firms and individuals has strengthened demand in the retail, real estate, and hospitality sectors.
Uzbekistan’s economy showed overall growth of 5.7% in 2022, according to EBRD estimates, reflecting a significant improvement in external and domestic demand conditions, including a more than doubling of remittances. The country increased exports of goods and services by 15.9%. Exports of goods and services added 15.9 per cent, with particularly large increases in shipments of textile, fruit, copper pipes, and electrical appliances (mostly to Russia). Domestic demand was boosted by a surge in money transfers and remittances
Gazeta.uz earlier wrote that Uzbekistan received a record $16.9 billion in remittances last year, 85% of which went to Russia.
The EBRD predicts that the economy is projected to grow by 6.5 per cent in both 2023 and 2024, driven by inflows of foreign investment, companies and individuals, well-managed privatisations and business climate reforms.
However, experts warn that economic growth could be hampered by a further escalation of Russia’s war on Ukraine and moderation of inflows of remittances.
Earlier, the IMF released its forecast for Central Asia and the Caucasus. Unlike the EBRD, the IMF expects the region’s economic growth to slow down to 4.2 percent this year. The IMF says external factors have a strong impact on the region’s prospects.