Institute for War and Peace Reporting | Giving Voice, Driving Change

Uzbek Growth Claims Questioned

As the rest of the world experiences negligible growth rates, Uzbekistan continues to assert that its economy is growing at an impressive rate.

On August 3, the state news agency UzA carried a report on the state of the economy in the first half of 2009, in which gross domestic product, GDP, was said to have risen by 8.2 per cent in real terms over the same period last year, reflecting strong performances from both industry and agriculture.

The figure was only slightly down on the 9.3 per cent growth claim made for January-June 2008.

Some domestic analysts believe the figures are an accurate reflection of timely government intervention to deflect the worst effects of global recession, but others believe the data is being manipulated or simply invented.

The Central Asian state’s government makes similar claims every year, in apparent contradiction of evidence that suggests the economy is struggling.

Tightly controlled by the state and largely cut off from the outside, the Uzbek economy depends heavily on export earnings from natural gas and cotton. However, world market prices of these normally lucrative export items have been dented by falling international demand.

Some economists in Uzbekistan see nothing surprising in claims that the economy is holding up despite these reverses, arguing that the government acted in good time to boost domestic industries, extending loans to exporters, allowing them to sell some goods at cost price or even less, and encouraging them to produce for the domestic market rather than abroad.

"Uzbekistan succeeding in reorienting local enterprises, increasing exports of raw materials and primary products, and restricting imports," said Dilmurat Holmatov, an economist from Tashkent.

Another Tashkent-based economist, Victor Ivonin, welcomes the government’s policy of effectively subsidising exports, which he contrasts with the laissez-faire policies of states like Kazakstan and Russia.

Ivonin also believes that maintaining a fixed exchange rate for the national currency and then writing off the fall in export income using government money has served the country better than the devaluations that both Russia and Kazakstan embarked on to keep their exports competitive.

Karen Srapionov, an analyst with the Avesta Investment Group in Tashkent, attributes the growth figures to more specific causes – increased production and sales by the Shurtan gas plant in the southwest of the country, and the securing of long-term energy export contracts with to Russia, Kazakstan and Afghanistan.

Other commentators remain sceptical of claims that the economy is experiencing massive growth.

"Even if the GDP growth rate stood at two or three per cent, everyone in the country would inevitably be enjoying rising in living standards, yet people’s lives are getting worse and worse,” said Tashpulat Yoldashev, an Uzbek political scientist now living abroad. "Uzbekistan is clearly in recession, so it makes no sense to be talking about growth.”

The Uzbek economy is uncompetitive to the extent that the government abstains from regional integration efforts, he says. Monetary policy is not helping, either, with a national currency that is not freely convertible and an acute shortage of cash in circulation, reflected in the recent trend towards paying wages and benefits by electronic transfer.

Yoldashev also points to high unemployment levels and pitiful wages and pensions in the public sector, leaving large parts of the population on very low incomes.

Another analyst, who did not want to be named, added that people were "visibly poor”, especially in rural areas, where he said "people often have nothing to eat".

He, too, dismissed claims of strong economic growth as ridiculous.

(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service has resumed, covering Uzbekistan and Turkmenistan.)