China, December 18, 2014

Center for Economic Research (Uzbekistan)

Economic Growth and Structural Transformation

Achievements: • High rates of economic growth,

even during the period of global financial crisis.

• Significant increase in the share of industry and services while reducing the share of agriculture in GDP.

• Diversification of the export structure, reducing the share of cotton and increasing the share of goods with higher added value.

26,3 17,1 14,2

21,1 23,9 24 24,2

37,3

28,1 30,1 26,3 18,0 17,6 17,6

36,7

41,7 43,2 42 48,9 50,1 50,2

13,1 12,5 10,6 9,2 8,3 8

0,0

20,0

40,0

60,0

80,0

100,0

120,0

1991 1995 2000 2005 2010 2012 2013

GDP structure , %

Net taxes on products

Services

Agriculture

Industry

48,4 27,5

19,1 11,3 9,3

1,7 5,4

3,8 9,7 10,9

2,5 2,9

5,3 5,1 5,6

4,7 10,3 11,5

24,8 34,6

6,6 9,2

6,8

7,8 48,4 3,4 8,4

5,5

6,5

7,7

13,7 12,2 9,1

17,3

21,3

30,2 30,5 27,7

12,5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1995 2000 2005 2010 2012

Structure of export, %

Other

Services

machinery and equipment

ferrous and non-ferrousmetalsenergy and oil products

Chemical products

Food products

0,0

5,0

10,0

15,0

20,0

25,0

30,0

-15,0

-10,0

-5,0

0,0

5,0

10,0

15,0

Dynamics of Economics growth and investment

GDP (growth, %) Investment (% to GDP)

Infrastructure Development

Achievement : • Extension of the length of roads and

railways. • Significant increase in providing

access to water and Natural gas for population.

• Dynamic development of IT sector.

Public roads with hard surface Public Railways Transportation of passengers Freight

190 326 572 1146 2714

5873

12978

16375

22700 25441

20274 21500

0

5000

10000

15000

20000

25000

30000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Mobile and Internet users

Number of mobile users (thousands)

Number of Internet users (thousands)

76,1

83,5 80,4

87

70

72

74

76

78

80

82

84

86

88

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Access to water and gas, %

Natural gas

Drinking water

Living Standards and Population’s Welfare

Achievements: • Significant decrease in poverty level. • Dynamic development of small business and

entrepreneurship. • Decreasing level of disparities in people’s

income

GDP per capita on PPP Money income per capita on PPP Gini coefficient, right scale

SB share in GDP, % Single tax rate (%), left scale Employment, %

104,2 108,4 112,9 121,3 129,8 139,5

152,7 166,5

180,0 195,3

212,0 229,4

248,2 27,0

16,0

0,0

5,0

10,0

15,0

20,0

25,0

30,0

0,0

50,0

100,0

150,0

200,0

250,0

300,0

Dynamics of Economic growth and Poverty reduction

GDP (2000=100), left scale Poverty level, %

Quality of Human Capital

Achievements: • High level of expenditures for social purposes • Significant decrease in maternal and infant

mortality • Increase in life expectancy

Share of expenditures on social sphere and security (% to total state budget expenditures) Dynamics of GDP growth (2000=100)

Education expenditures, public (% of GDP)

500,0

550,0

600,0

650,0

700,0

750,0

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Maternal and Infant mortality

Birth (thousands), right scale

Maternal Mortality (per 100 000 live birth)

Infant mortality (per 1,000 live birth)

67,4

70,7

73,5

75,5

60

62

64

66

68

70

72

74

76

78

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Life expectancy, years

Male Female

Growth rates towards 2020 and beyond Considering Scenarios

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

2010 2020 2030

KENYA

VIETNAM

MOROCCO

BULGARIA

AZERBAIJAN

UZBEKISTAN

PERU

SRI LANKA

THAILAND

ALGERIA

4 % growth

6 % growth

8 % growth8 % growth

Azerbaijan Bulgaria

6% growth

Morocco Vietnam

4% growth

Vietnam Kenya

Long-term development challenges : production structure of GDP

Challenges: • To increase the share of industry in GDP from 35,4% in 2010

to 37% requires ensuring annual industrial growth rate at 8.3%.

• An urgent task is to increase the share of processing industry in the GDP. Increasing the level from 9% in 2010 to 15% by 2030 requires the achievement of annual growth rates of added cost in processing at 11.3% point with an average annual growth rate in mining industries at the 5% level.

• In order to increase the share of services in GDP from 42.5% in 2010 to 56% in 2030, an average annual growth rate of added value in this sector should reach 9.2%.

• Providing the average annual growth rate of added cost in agriculture at 2.6% level would reduce its share in GDP from 19.5% to 8%.

Long-term development challenges: Investments and Economic Growth

Government priorities: • Achievement of an annual economic growth at

8% in the long term requires the share of investment in GDP about 30%, which implies annual investments growth at the level of 9.4%.

• Ensuring the annual investments growth rate at the level of 9.4% requires annual increase of gross savings at 11.3%.

• Re-orientation of investment flows from mining to processing industries is necessary.

China

High income

India

Korea Middle Income

Singapore Slovak

Thailand

Uzbekistan

0

5

10

15

20

25

30

35

40

45

0 2 4 6 8 10 12

Gro

ss f

ixe

d c

ap

ita

l fo

rma

tio

n (

%

of

GD

P)

GDP growth (annual %)

GDP growth and Investment (%), avr. 2001-2010

energy

metallurgy

mechanical engineering

light industry

food industry

construction materials

chemical and petrochemical industry

other

Long-term development challenges: Financial sector

Government Priorities: • To facilitate financing of investment activities and strengthen the

role of the financial sector in this process, the rate of monetization of the economy and the share of bank credits in GDP should reach almost 100%. This requires an annual growth of economy monetization and increase of bank credits at 17%.

• Increasing the level of capitalization of listed companies up to 70% of GDP implies ensuring the rate of annual growth at 35%.

• The policy of the Government of Uzbekistan aims at addressing these issues. In particular, if in 2000 the level of economy monetization was at 12.2%, the figures for 2005 formed 15.1%, and for 2010 - 19.4%. Only in 2011 a turnover of the stock market increased by more than 3 times.

Long-term development challenges: Foreign Trade

Challenges: • Ensuring the average annual economic growth rate at 8%

level requires growth of exports at 10% on average every year. As a result, by 2030 the volume of merchandise export will increase up to 79.4 billion dollars in prices of 2010. With an average annual growth of processing export by 15.3% during 2012-2020, and by 17.9% in 2021-2030 (the extractive industries - 8.3 and 4.0% respectively), the share of processing industries will increase in merchandise exports up to 60% by 2030.

• To ensure the dynamic export growth, measures on reducing the cost of exports and imports by constructing alternative transit corridors and optimizing customs procedures should be taken, which will reduce the cost of exports and imports, respectively, 2500 and 2875 dollars per container.

3,1

14,1 18,7

48,4

61,3 67,2

73,2

89,6

0102030405060708090

100

AZE KAZ UZB Lowermiddleincome

Uppermiddleincome

MYS OECD KOR

Manufactures exports (% of merchandise exports)(2009)

Long-term development challenges: Agriculture

Issues: • High growth rates of manufacturing and services will reduce the share

of agriculture in GDP, while agriculture will be developed with an average annual rate at 3.3%, strengthening the country's food security. This is especially important for:

• Strengthening food security • Facilitating diversification • Assisting productive employment • Increasing volume of local demand for manufacturing goods

• Decrease of the share of agriculture in GDP for 2011-2030 years from 17.5 to 8.0% and a reducing the level of population employed in agriculture from 25.2 to 15.4% should go in line with creation of new jobs through development of manufacturing and services in urban villages and small cities.

• As a result - accelerated urbanization process, leading lead to decrease of the rural population from 48.5% in 2010 to 37.0% in 2030.

Long-term Development Challenges : Education, Innovations and IT

0

1

2

3

4

5

6

7

8

9

0

20

40

60

80

100

120

140

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

Uzbekistan: ICT Development

число персональных компьютеров (на 100 чел.)

число конвергентных устройств

пропускная способность внешнего интернет канала (Тбит/с), правая шкала

Challenges: • Developing a system of education, forming a

creative and innovative thinking • Establishing institutions of the innovation

system, which provides efficient transformation of innovative ideas into commercial and socially important products.

• Providing high-speed access to global knowledge and information, which contributes to modernizing society and accelerates process of following the global ideas and trends

Number of PC (per 100 people) Number of convergent facilities Bandwidth of external Internet channel (Tbit/sec), right scale

Long-term Development Challenges: Public Health and Healthy Generation

Challenges: • High rates of economic growth and real income will lead to

increased demand for health services. • Further development of the health care system, providing

modern medical and diagnostic equipment, requires an increase in expenditures for health

• Increasing share of older population in the age structure, also requires increased spending on healthcare.

• Addressing this challenges requires creating of favorable conditions for development of alternative financing recourses of the sector, including medical insurance.

Uzbekistan 1991-2012 Strengthened State, Stabilized economy, Structural reforms

• Creating basic institutions of an

independent state • Introducing basic institutions and

principles of market based economy

• National currency • Prices liberalization • Direct government support of

real sector enterprises • SME privatization • Creating a new system of social

protection • …

ОПРЕДЕЛЕНИЕ ПРИОРИТЕТОВ

1991 - 1995

Overcoming Economic Recession

1996 - 2003

Recovering Growth and Launching Structural Reforms

2004 - 2012

Стабилизация экономики и умеренный рост

Deepening Structural reforms and Accelerating Growth

• Achievement of grain and energy

independence • Expanding privatization process,

including large enterprises involving strategic investors

• Creation of new large industrial enterprises

• Localization programs in the industrial sector

• Reforming the management system of the economy sectors

• Launching the National Training Programme

• …

• Creating incentives for export • Improving conditions for

development of small business and entrepreneurship

• Sectoral modernization programs

• Stimulating industrial cooperation

• Creating free economic zones, transport and logistics hubs

• Wide use of ICT in different areas • …

Uzbekistan 2030 Transformed Economy and State

for the prosperous development, harmonious society and secure future

Sustaining peace and security

Changing the pattern of growth and the structure

of national economy

Building effective Institutions to

drive the accelerated

transformation

Creating human capital for the

changing economy, state

and society

Building harmonious

society, united on its way forward

• Enhanced regulatory framework • Reduced transaction costs of

business • Favorable conditions created for

formation of large business groups • Encourage savings, and their

transformation into investment • …

• Attraction of high technologies,

increase the share of high-tech industries in production and export structure

• Creating favorable conditions for expansion of private funding of modernization processes

• ….

SETTING PRIORITIES

DEVELOPING A ROAD MAP TOWARD 2020 AND BEYOND

• Expanding production of goods and

services with high added value • Transition to an innovation

economy/knowledge-based economy

• Development of tools to promote Uzbekistan’s geo-economic interests

• …

2012 - 2015 2020 - 2030 2016 - 2020

Modernizing basic sectors Developing processing industry Foreign trade and integration to the global economy

https://www.facebook.com/CER.Uzbekistan Visit us for more info:

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CER’s Flagship Initiatives of 2014:

Looking beyond the horizon: guidelines and best practices in formulating national visions http://vision.cer.uz

Uzbekistan Towards 2030: A New Social Protection Model for a Changing Economy and Society

Food Security in 2025: Availability, Accessibility and Nutrition

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