Uzbekistan has significantly transformed its economy during the past decade, focusing on market reforms, export diversification, and other economic measures. Its economy has had resilient economic performance since the 1990s, most notably demonstrated by its ability to grow by over 8% during the Great Financial Crisis.
While the economy has transformed significantly since 2017, Uzbekistan still has many market reforms that have been newly implemented or will be implemented by 2030. These initiatives could serve as a catalyst to help Uzbekistan develop a more robust private sector economy and fully exploit its resources and demographic dividend. Uzbekistan stands out globally due to its high youth population, consistent economic growth, abundant natural resources, and geopolitical significance as Central Asia rises in power.
There are still many hurdles for Uzbekistan to overcome. Uzbekistan’s cost of capital remains very high, putting a strain on SME oriented growth, and the private sector has been unable to keep up with the rapid influx of new youth entering the job market. Uzbekistan also needs to move forward with another wave of privatizations to help encourage continued foreign interest in the economy and stock market. The full realization of its potential depends on the success of continued economic reforms in the coming years.
“Over the past nine years, together with you and our people, we have gone through a significant path of development. Our economy has acquired the new quality, we have expanded market relations and social protection, and strengthened the rule of law. Most importantly, the results of our reforms are felt in every mahalla, every family, and by every individual in their daily lives,” said the Head of State in the beginning of his speech.
“When we started this work, one-third of our population lived below the poverty line. Thanks to the implementation of a completely new social protection system, providing over 100 types of services—such as loans, subsidies, and compensations—delivered through the ‘seven’ in mahallas, more than 8.5 million people have risen out of poverty, and unemployment has been reduced by half. As a result, this year we achieved the target set three years ago to halve poverty by the end of 2026,” stated the President. — Shavkat Mirziyoyev President of the Republic of Uzbekistan Address to the Oliy Majlis, December 26, 2025
Examining Reforms Since 2017
Beginning in 2017, Uzbekistan implemented a series of new reforms, including a liberalization of its exchange rate, price liberalization, adjustment of energy tariffs, and a focus on decreasing the state’s role in the economy.
The Uzbek soum depreciated by over 50% overnight in September 2017, after the government moved away from this pegged rate. The combination of increased competitiveness in its exports and other reforms helped drive strong economic growth.
Uzbekistan’s government continued to introduce other foreign-friendly initiatives in the 2020s designed to reduce the role of the state in the economy. Some of these reforms included abolishing business regulations of the government, introducing an anti-corruption agenda, creating additional international arbitration laws, abolishing select licenses and permits for new companies, and creating an E-government digital system. Uzbekistan’s economy also worked to obtain international credit ratings for 23 SMEs, and introduced new laws in 2023-2024 to improve the efficiency of state property management and reduce conflicts of interest in state organizations.
These collective reforms played a key role in improving governance, reducing corruption risks, liberalising the economy, and helping Uzbekistan attract a new wave of foreign capital. Uzbekistan’s position in the Corruption Perceptions Index improved from 157 in 2017 to 124 in 2025, placing it ahead of frontier and emerging markets like Egypt, Peru, Kenya, Pakistan, and Bangladesh.
State asset privatizations between 2021 and the first half of 2025 reached $3.7 billion, including Ipoteka Bank, one of the country’s largest banks. The government is committed to following through with a further wave of privatizations through the 2030s, including the privatization of leading companies in the country’s banking sector. The country’s latest vision will focus on privatizing leading companies in banking, many of which have been pivoting to commercial lending, as well as other state-dominated companies.
These privatization efforts have led to increased investments in Uzbekistan’s economy since 2017. Uzbekistan attracted around $12 billion in FDI in 2024, compared to only $7.2 billion in the previous year. By 2025, Uzbekistan was the second fastest-growing economy in the CIS, and its current growth outlook for 2026 and 2027 is favorable.
Uzbekistan’s capital markets are still underdeveloped relative to some of these peers, which boast much larger stock markets. Uzbekistan’s stock market currently stands at slightly over $20 billion, which is well below 20% of GDP. Further privatization of the economy can help draw more attention to Uzbekistan’s economy and capital markets.
These characteristics have helped to attract increased institutional interest in Uzbekistan’s capital markets. Marius Dan, who is the CEO for Central Asia at Templeton Global Investments (Franklin Templeton), commented on their approach to unlock value in state-owned companies through their new investment fund in a June 2025 article.
“Our mandate is to focus on transforming the state-owned companies, increasing their efficiency, their profitability, and attracting international investment into the country through the listing of the fund itself, as well as the listing of the underlying portfolio companies.”
The President of Uzbekistan also recently announced its plan to modernize the stock market through a partnership with Nasdaq.
Scott Osheroff, CIO of the Asia Frontier Capital Uzbekistan Fund, commented on how this move could help the country’s stock market in a recent October 2025 interview.
“If the Nasdaq indeed gets involved with improving Uzbekistan’s capital market, it would be a vote of confidence in Uzbekistan’s potential and hopefully with it come more streamlined infrastructure, enabling more market participation and hopefully more listings.”
Overall, Uzbekistan’s stock market has received increased interest, and there is room for the depth and liquidity of the market to improve in the coming years.
Uzbekistan’s Stable Economic Profile
Uzbekistan’s economy has grown by over 5% per annum since 2017 and has ample growth potential ahead of it. The Asian Development Bank projects that Uzbekistan’s economy will grow by 6.7% in 2026, well ahead of the average growth rate in frontier and emerging markets.
Uzbekistan stands out in the region for its comparatively lower GDP per capita, which has still been rising rapidly in the past few decades. Uzbekistan currently has a population of over 37 million and a GDP per capita of slightly over $3,000, compared to the Europe and Central Asia average of over $30,000.
Uzbekistan is the most populous country in Central Asia and still has a much lower GDP per capita relative to peers like Kazakhstan. Its GDP per capita has nearly doubled since 2017 and could grow substantially in the upcoming years.
Uzbekistan’s Central Bank has also kept inflation under control and implemented massive improvements over the past decade. Inflation recently fell to 7.3%, compared to its high in 2018 following the Uzbek soum’s devaluation and implementation of market reforms.
As inflation has improved, Uzbekistan’s Central Bank has been slowly beginning to lower the cost of capital for businesses. SMEs are a huge driver of the economy in Uzbekistan, as they account for around 75% of employment and 55% of GDP. Uzbekistan’s Central Bank has been able to lower rates from its high of 17% to 14%, and could potentially further cut rates in 2026 and 2027 if inflation is subdued. The ADB projects that inflation will remain at 7% in 2026, which should help support subsequent rate cuts in the future.
Uzbekistan’s stable economic profile is underpinned by its relatively low debt levels and diverse sources of reserves. Uzbekistan’s government has also been boosting its foreign reserves, most notably focusing on increasing its holdings of gold. Data from the World Bank in 2024 shows that Uzbekistan’s foreign exchange reserves covered 10 months of imports, well above the IMF’s suggestion of 3 months of import cover.
Uzbekistan’s public debt currently stands at around 34% of GDP, while debt to GDP levels have reached around 75% in frontier markets. While many frontier and emerging markets are struggling with the debt they built up following the Covid-19 pandemic, Uzbekistan’s government has still been able to keep its debt at reasonable levels.
Uzbekistan’s currency has been more stable following its massive devaluation in 2017, and the Uzbek soum even appreciated by around 7% in 2025. At the same time, Uzbekistan remains export competitive in the region due to its currency and wage structure, which can support sustainable export-oriented growth in new sectors in the coming years.
Uzbekistan Possesses Many High Potential Industries
While Uzbekistan’s overreliance on commodity exports and state-dominated industries was previously a limitation for the economy, new reforms have helped diversify its economy and improve the efficiency of state-dominated industries. Moves to liberalize and devalue its currency, and to combat state corruption, have allowed Uzbekistan to develop existing industries and emerge as a competitive export powerhouse in the Central Asian region.
Uzbekistan also benefits from its abundant resources, geographical significance, and favorable demographics. Uzbekistan is Central Asia’s most populous country, with a population of over 37 million, and a median age of 27. The country is ranked globally for various resources, and is most significantly transforming its economy through robust private sector growth, attempting to pivot away from traditional areas like mining and agriculture. There is also ample potential for local companies to tap into the rising consumer market, due to gradually rising wages and favorable demographics.
Uzbekistan has a very favorable export structure, with key markets like Russia, China, and Kazakhstan accounting for around 27% of its exports. Uzbekistan still has a very diversified export structure, with the potential to expand into new markets as export quality improves and it further develops its manufacturing base. Uzbekistan has been targeting new markets like the United States, where its exports soared by over 90% per annum from 2021 to 2024. Uzbekistan’s economy may be able to benefit from increased economic cooperation with the United States, while other economies may be less shielded from the impact of tariffs. Uzbekistan recently signed a critical minerals deal with the United States, which provides the opportunity for it to exploit its current resources and further boost trade with the United States. Uzbekistan could also be positioned as an alternative to peers like China and India because of the lower tariff rates.
Uzbekistan has mainly focused on exporting commodities, services, and industrial goods, while having high machinery imports to help support its rising industrialization. The country’s low wages have made it very favorable in the region, allowing it to emerge as a manufacturing powerhouse. The country’s minimum wage is less than $100/month, making it competitive in both the region and among other frontier markets.
One of Uzbekistan’s obvious strengths is its abundance of natural resource reserves, at a time when many commodities like copper, gold, and uranium have rallied substantially. Uzbekistan is 16th globally for natural gas reserves, 11th globally for copper reserves, 5th globally as a uranium supplier, and 10th in global gold production.
Uzbekistan’s textile industry is also a strong driver of growth in the country, with a lot of untapped potential. Efforts to remove state control of the industry have allowed Uzbekistan’s textile exports to boom, and it currently stands as one of the world’s largest cotton producers. By 2023, Uzbekistan was also able to convert all of its raw cotton into yarn, helping it move up the value chain in its textile exports.
Uzbekistan’s focus on improving efficiency and reducing state corruption has also helped strengthen the international reputation of its export sector. The country was recently removed from the Watch List in the U.S. Trade Representative’s (USTR) 2024 Special 301 Report on intellectual property protection.
Uzbekistan’s banking industry also has ample growth potential, as growth in the country remains robust, and household debt levels in Uzbekistan are still reasonably low, even after rapid growth in consumer loans. Credit levels to individuals and small businesses remain relatively low, and Uzbekistan’s banking industry has ample potential to fill these gaps, as seen by its recent focus on commercial credit growth. Banks also have room to improve efficiency in the coming years as they become the target of the next wave of privatization efforts through the end of the 2020s.
The combination of economic liberalization and rising FDI will help Uzbekistan continue to diversify outside of traditional commodity markets and to find new export markets. Uzbekistan also shows a lot of promise in other areas, such as its chemicals and pharmaceutical industries. Uzbekistan has nearly doubled its chemical exports following the market reforms in 2017 and currently exports more than $1 billion worth of chemical products. Uzbekistan also currently has five special economic zones dedicated to pharmaceutical manufacturing and has begun exporting pharmaceutical products.
Uzbekistan’s tourism industry was one of the fastest-growing globally, and the Uzbekistan’s government has strong plans to expand tourism through 2030. The Uzbekistan’s government plans to attract 20 million tourists by 2030, allowing the tourism industry’s contribution to GDP to rise from 3.5% to 7%.
Uzbekistan has currently built up manufacturing infrastructure to help it continue to pivot away from agriculture and resource-driven growth. At the moment, Uzbekistan has over 30 special economic zones, with thousands of companies participating in its SEZs, SIZs, and technoparks. This setup will allow Uzbekistan to pivot away from the resource-driven FDI narratives that have previously dominated Central Asia and tap into manufacturing-oriented growth.
Securing Uzbekistan’s Future
Uzbekistan’s privatization efforts will likely continue strongly through 2030, leading to its growth surpassing that of other Central Asian peers. While its previous agriculture and resource-driven growth has a long benchmark of success, Uzbekistan needs to continue cutting the role of the state in the economy and diversifying into new manufacturing industries to continue delivering sustainable, higher-value growth.
Uzbekistan’s growth efforts are largely part of a broader narrative taking place in the Central Asian region, which has attracted massive inflows of FDI from China and other dominant countries. Uzbekistan is one of the prime targets of China’s Belt and Road Initiative, as China strives to fortify its regional influence in Central Asian economies. This geopolitical setup for Uzbekistan, and the Central Asia region in general, is a unique catalyst for the economy of Uzbekistan, which is a key target for many countries that are vying for influence in the Central Asia region.
The growth of the private sector is a must for Uzbekistan, as the previous state and resource-driven economy has failed to supply adequate career opportunities for Uzbekistan’s highly educated youth population. Uzbekistan’s youth unemployment rate has been over 10% in previous years, highlighting how the private sector has failed, making it difficult for Uzbekistan to fully realize its demographic attractiveness.
Key steps for Uzbekistan to take include continuing economic reforms and addressing inflation so that the country’s Central Bank can cut interest rates in 2026 and 2027. This move would help solidify growth and provide much-needed support for smaller enterprises in Uzbekistan, which struggle with higher rates and relatively lower credit availability.
Uzbekistan is in the early stages of building a solid manufacturing industry, helping to diversify its economic growth and provide more opportunities for its high youth population. At the same time, Uzbekistan is well-positioned in terms of resource growth and is positioned to meet energy and critical mineral needs as data centers, electric vehicles, and other economic developments drive the growth for these materials. These multifaceted growth sources can help support the economy as Uzbekistan’s government continues to push through with new measures to transform the economy.
By Dylan Waller, The United States
PHOTO: The Press Service of the President of the Republic of Uzbekistan, shutterstock(3); afc, Grigoriy Aisenshtat / ADB
