In 2024, Central Asian economies are expected to see growth slowing to 5.4%. However, a rebound to 5.9% is expected in 2025, as projected in the Regional Economic Prospects (REP) report published by the European Bank for Reconstruction and Development (EBRD).

The report notes that the volume of intermediated trade with Russia, which was a significant growth driver for many Central Asian economies in 2023, has now peaked.

The report notes that intermediated trade with Russia, which had been a significant growth contributor for many Central Asian economies in 2023, has now reached a plateau.

“Severe floods and extremely cold weather that hit Kazakhstan and Mongolia, respectively, will negatively impact their growth in the short term but the region’s outlook for both 2024 and 2025 remains very positive,” EBRD analysts said.

Over the last two years, the region has seen a sizable increase in publicly and privately financed investment in transport, logistics and export-oriented manufacturing capacities.

“Robust growth in wages and real incomes, coupled with a surge in international arrivals and tourism, fuelled a consumption boom, further supported by technological advances in consumer lending,” the report mentioned.

Intraregional trade, investment and tourism continued to rise, assisted by much-improved regional cooperation on common challenges ranging from water and energy shortages to transport and border management bottlenecks.

Inflation receded to single-digit levels in all countries in line with broader global trends, allowing central banks in most Central Asian states to reprioritise growth and start softening their monetary policy stances, the report said.

The EBRD expects that the region’s public policy agendas in 2024−25 will be dominated by the need for urgent improvements in infrastructure and public management practices, implementation of politically sensitive tariff reforms and efforts to reach a broad regional agreement on the use of shared resources, such as transport, water and energy.

In Uzbekistan, real GDP increased by 6% in 2023 driven by rapid credit expansion, rising remittances and international arrivals.

“The country’s economic growth was balanced, with services, construction and general industries being the main contributors. Export revenues rose significantly thanks to high gold exports, strong tourism revenues and growing shipments of foodstuffs and manufactured products,” the report mentioned.

The EBRD’s REP is predicting that ongoing tariff reforms will help cut energy subsidies, reducing public expenditures by an estimated 1.5 percentage points of GDP.

The economy is forecast to expand by 6.5% in 2024 and 6% in 2025, with strong contributions from fixed capital investment and net exports, analysts stated.

Privatization and market-oriented reforms may strengthen the outlook by attracting foreign direct investment. On the downside, growth is likely to be constrained by chronic energy and water deficits, the EBRD warned.

In May 2023, the EBRD also forecasted the 6.5% growth of Uzbekistan’s economy for both 2023 and 2024, driven by inflows of foreign investment, companies and individuals, as well as well-organized privatization and business climate reforms.