Uzbekistan has the world’s fourth biggest gold reserves. The nation mines 80 tons of gold each year, ranking sixth in the world. Uzbekistan’s copper reserves are ranked tenth in the world, while its uranium reserves are ranked twelfth. The nation ranks eighth in the world in terms of uranium production. Uzbekneftegas, the Uzbek national gas corporation, ranks 11th in the world in natural gas production, with an annual output of 60–70 billion cubic meters (2.1–2.5 trillion cubic feet). Uzbekistan has substantial undeveloped oil and gas reserves: there are 194 hydrocarbon resources in the nation, including 98 condensate and natural gas deposits and 96 gas condensate deposits.
The China National Petroleum Corporation (CNPC), Petronas, the Korea National Oil Corporation, Gazprom, Lukoil, and Uzbekneftegas are the major companies engaged in Uzbekistan’s energy industry.
Uzbekistan’s economy, like many other Commonwealth of Independent States (CIS) countries, fell during the early years of transition and subsequently rebounded after 1995, when the cumulative impact of policy changes became apparent. It grew at a rapid pace, increasing by 4% per year between 1998 and 2003 and then accelerated to 7%–8% per year afterwards. According to IMF projections, GDP in 2008 will be almost twice that in 1995. (in constant prices). Since 2003, yearly inflation rates have averaged less than 10%.
Uzbekistan has a GDP per capita of US$1,900 (in current currency in 2013), which equates to US$3,800 in PPP terms. Commodities dominate economic output. Uzbekistan was the world’s seventh-largest producer and fifth-largest exporter of cotton in 2011, as well as the world’s seventh-largest producer of gold. It is also a major producer of natural gas, coal, copper, oil, silver, and uranium in the area.
Agriculture employs 26 percent of Uzbekistan’s labor force and accounts for 18 percent of the country’s GDP (2012 data). Cultivable land covers 4.4 million hectares, or approximately 10% of Uzbekistan’s total land area. While official unemployment is extremely low, underemployment is believed to be at least 20%, particularly in rural regions. During the cotton harvest, all students and instructors are still recruited as unpaid laborers to assist in the fields. In South Korea, Uzbek cotton is even used to manufacture banknotes. Because to the exploitation of child labor in Uzbekistan, many businesses, including Tesco, C&A, Marks & Spencer, Gap, and H&M, have decided to boycott Uzbek cotton.
Faced with a slew of economic difficulties after gaining independence, the government pursued an evolutionary reform approach that emphasized state control, import reduction, and energy self-sufficiency. Since 1994, the state-controlled media has frequently declared the success of this “Uzbekistan Economic Model,” claiming that it is a one-of-a-kind example of a seamless transition to a market economy while avoiding shock, pauperism, and stagnation.
Significant macroeconomic and structural changes have been postponed as part of the gradualist reform approach. The state, in the hands of the bureaucracy, has remained a major economic force. Corruption pervades society and becomes increasingly prevalent with time: Uzbekistan was 137th out of 159 nations in the 2005 Corruption Perception Index, but ranked 175th out of 179 countries in 2007. According to the International Crisis Group’s February 2006 assessment on the country, earnings from major exports, including cotton, gold, maize, and now gas, are allocated within a relatively narrow circle of the governing class, with little or no benefit to the general public. Recent high-profile corruption scandals involving government contracts and major multinational corporations, most notably TeliaSoneria, have shown that firms operating in Uzbekistan are especially susceptible to corruption.
The government, according to the Economist Intelligence Unit, is “resistant to permitting the growth of an independent private sector over which it would have no influence.”
Economic policies have discouraged foreign investment, resulting in the lowest per capita income in the CIS. For many years, the most significant obstacle to international firms entering the Uzbekistan market has been the difficulties in changing money. In 2003, the government accepted the International Monetary Fund’s (IMF) requirements under Article VIII, which provided for complete currency convertibility. However, stringent currency restrictions and border tightening have mitigated the impact of this policy.
Immediately after independence (1992–1994), Uzbekistan suffered severe inflation of over 1000 percent per year. Stabilization measures carried out with IMF assistance paid well. Inflation rates were reduced to 50% in 1997 and subsequently to 22 percent in 2002. Since 2003, yearly inflation rates have averaged less than 10%. Tight economic measures in 2004 resulted in a significant decrease in inflation to 3.8 percent (although alternative estimates based on the price of a true market basket, put it at 15 percent ). Inflation rates rose to 6.9 percent in 2006 and 7.6 percent in 2007, but have since stayed in the single digits.
Uzbekistan’s government limits international imports in a variety of methods, including hefty import tariffs. To safeguard locally produced products, excise taxes are used in a very discriminating way. Official tariffs are coupled with unofficial, discriminatory levies, resulting in total costs of up to 100 to 150 percent of the product’s real worth, making imported goods practically expensive. Import substitution is an officially stated strategy, and the government proudly claims that the amount of consumer products imported has been reduced by a factor of two. Import tariffs in Uzbekistan are officially waived for a number of CIS nations.
The Republican Stock Exchange (RSE) first opened its doors in 1994. RSE trades the equities of all Uzbek joint stock enterprises (about 1250). As of January 2013, there were more than 110 listed businesses. Securities market volume surpassed $2 trillion in 2012, and the figure is constantly increasing due to businesses’ increased interest in obtaining required resources via the capital market. According to the Central Depository, the par value of outstanding shares of Uzbek emitters surpassed 9 trillion in January 2013.
Since 2003, Uzbekistan has maintained a solid external stance. The current account turned into a large surplus (between 9 percent and 11 percent of GDP from 2003 to 2005), thanks in part to the recovery of world market prices for gold and cotton (the country’s key export commodities), expanded natural gas and some manufacturing exports, and increased labor migrant transfers, and foreign exchange reserves, including gold, more than doubled to around US$3 billion.
In 2010, foreign exchange reserves totaled 13 billion US dollars.
According to a worldwide bank HSBC study, Uzbekistan is expected to be one of the world’s fastest expanding economies (number 26) in the next decades.