Economic trends
Structural reforms are long in coming, especially in the creation of a healthy environment for foreign investments and the liberalization of the agricultural sector from State control.
Uzbekistan's GDP growth remained strong (+9%) in 2008, and settled at 8.2% during the first quarter of 2009. The country was only partially affected by the international financial crisis. These results are to be attributed to the growing industrial services sectors, as well as to an anti-crisis plan aimed at commercial banks. As for agriculture, it showed strong growth in the first quarter of 2009.
However, Uzbekistan is facing a high inflation rate (7.8% in 2008). The unemployment rate is high, even though the official rate is very low. Due to the 2008-2009 financial crisis, Uzbek workers who had emigrated to Russia and neighboring countries (numbers is estimated at 3 to 5 million), returned to their country. This return will result in the reduction of the financial influx which was made up of money the workers sent to their families.
High corruption within the government and an extremely restrictive trade regime are factors that slow down the economy.
Main branches of industry
Agriculture is the main pillar of the economy and contributes nearly 25% to the GDP. It showed a growth of 4.6% during the first quarter of 2009. Cotton remains the main source of Uzbekistan's foreign exchange but exports fell by 7.8% during the first quarter of 2009. The other main crops are fruits and vegetables, and livestock. Cotton, silk, and wool provide the basis for Uzbekistan's textile industry. Traditional crafts such as silk dying and carpet weaving, put on hold during Soviet rule, have been revived since independence.
Additionally, the country has abundant natural resources; it is the 9th biggest gold producer in the world. Other major mineral ores available are coal, zinc, copper and tungsten. The country is also a big gas and oil producer. The industrial sector contributes nearly a third of the GDP. Machine building, metallurgy, food-processing, the manufacture of chemical products, fertilizers and building materials are the most important industries. Along with gold and cotton, gas remains one of the country's most important sources of foreign exchange.
International trade
The over-regulated trade policy, aimed at maintaining hard currency reserves, leaves little room for imports. To a large extent, Uzbekistan's foreign trade revenues depend on the international prices of gold and cotton. Therefore, the country is profiting from the record gold prices, which have been climbing since 2006. However, the drop in global demand at the end of 2008 and beginning of 2009 have affected exports. Cotton remains the main source of foreign exchange for Uzbekistan though its cultivation was very strongly affected by the drought.
Gas sales almost tripled in 2007 due to the doubling of prices, and also to the increase, by 33%, of the sale volumes. The increase in imports is attributed to a very strict control policy, as well as very high tariff barriers. However, this should not hide the very real significant smuggling border trade. The country essentially imports machinery and equipment, chemical products, food products and ferrous and non-ferrous metals.
Trade with Russia, the most important trade partner after the Union European, represents more than one-fourth of the total Uzbek business volume, against 50% with the EU. Uzbekistan sells cars, cotton and almost 90% of its agricultural production to Russia. Russia in turn supplies manufactured products (equipment goods and arms). A drop in trade with Russia was noted in 2008. The Commonwealth of Independent States contribute approximately a third of the foreign trade.
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