S&P Keeps Uzbekistan’s Credit Rating as “Stable”
Economy
The global credit rating agency S&P has maintained Uzbekistan’s sovereign credit rating at “BB-/B” (stable outlook). This is reported by The Times of Central Asia with reference to the company's report.
Its latest report on Uzbekistan mentions that:
— In 2024-2027, the average economic growth is forecasted to be 5.2%, slightly lower than last year’s 6%. Financial and governance reforms, including a planned increase in energy tariffs, will support the country’s investment prospects;
— Growth in Uzbekistan is mainly due to domestic and international investments, which accounted for about 43% of the GDP last year;
— From 2021 to 2023, Uzbekistan has seen strong real GDP growth, averaging around 6.4% annually, and we expect the outlook to remain strong, supported by public and private investment;
— Uzbekistan’s economy continues to weather the effects of the Russia-Ukraine war well, though remittance flows and remittances from Russia have declined from their 2022 peak. The flow of remittances was estimated to be approximately $11 billion in 2023 (11% of GDP) but was still nearly 40% higher than in 2021 and up 9% year-over-year in the first quarter of 2024. Russia remains Uzbekistan’s largest remittance source;
— The country benefits from favourable demographics with a young population. Almost 90% of the population is of working age or below, providing an opportunity for growth based on labor supply. However, analysts say job growth will need help to keep up with demand. The weakness of the Russian economy, where most permanent and seasonal migrants in Uzbekistan are employed, may exacerbate this issue;
— The effectiveness of Uzbekistan’s monetary policy has improved in recent years. One of the most significant reforms was the exchange rate liberalization in September 2017. The central bank intervenes in the foreign exchange market from time to time to moderate volatility and assess the appreciation of the local currency through large purchases of gold.
— In 2024-2027, the average economic growth is forecasted to be 5.2%, slightly lower than last year’s 6%. Financial and governance reforms, including a planned increase in energy tariffs, will support the country’s investment prospects;
— Growth in Uzbekistan is mainly due to domestic and international investments, which accounted for about 43% of the GDP last year;
— From 2021 to 2023, Uzbekistan has seen strong real GDP growth, averaging around 6.4% annually, and we expect the outlook to remain strong, supported by public and private investment;
— Uzbekistan’s economy continues to weather the effects of the Russia-Ukraine war well, though remittance flows and remittances from Russia have declined from their 2022 peak. The flow of remittances was estimated to be approximately $11 billion in 2023 (11% of GDP) but was still nearly 40% higher than in 2021 and up 9% year-over-year in the first quarter of 2024. Russia remains Uzbekistan’s largest remittance source;
— The country benefits from favourable demographics with a young population. Almost 90% of the population is of working age or below, providing an opportunity for growth based on labor supply. However, analysts say job growth will need help to keep up with demand. The weakness of the Russian economy, where most permanent and seasonal migrants in Uzbekistan are employed, may exacerbate this issue;
— The effectiveness of Uzbekistan’s monetary policy has improved in recent years. One of the most significant reforms was the exchange rate liberalization in September 2017. The central bank intervenes in the foreign exchange market from time to time to moderate volatility and assess the appreciation of the local currency through large purchases of gold.
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