Outcomes of the Socio-Economic Development of Uzbekistan in 2015 and the Most Important Priorities of Economic Program for 2016.
The Cabinet of Ministers of the Republic of Uzbekistan convened for an extended meeting on 15 January 2016 to discuss the outcomes of socio-economic development in the country in 2015 and the crucial priorities of economic program for the year 2016.
The President of the Republic of Uzbekistan Islam Karimov delivered a keynote speech at the session.
In his address the Head of State have underlined that analyzing progressive advancement of the country on path of democratic reforms and sustainable development, Uzbekistan has all grounds to state that last year the country had undertaken decisive steps in implementation of fundamentally important reforms aimed at achieving the main goal – to reach the level of developed democratic countries in the world with a strong social oriented economy, providing a decent standards and quality of life of Uzbek people.
In this context, the President had noted the implementation of a well thought-out Program aimed at providing deep structural changes, reliable protection of interests of private entrepreneurship and small business, and what is crucial – ensuring of prioritizing the role of the private property, progressive reduction of state presence in Uzbekistan’s economy in legislative, regulatory and practical terms as it is outlined in the Constitution.
Summarizing the outcomes of 2015, the President Islam Karimov claimed that the country had carried a huge scale and depth of work on renewal and reform of country, achieving stability and sustainable growth and macroeconomic balance of economy.
Despite the ongoing global financial and economic crisis, last year the GDP grew by 8%, industrial output – by 8%, agricultural production – by almost 7%, construction and installation works – almost by 18%. The annual budget is executed with a surplus of 0.1% of GDP. The inflation rate was at 5.6%, that is, within the forecasted parameters.
In spite of the significant slowdown in the world trade and reduction of external demand, world prices decline for major export commodities, Uzbekistan have managed to achieve a positive balance in foreign trade, which allowed for growth of state reserves.
Low level of public debt that does not exceed 18.5% of GDP and this demonstrates the results achieved and the macroeconomic stability in the country. In 2015 more than 980 thousand jobs were created, including more than 60% – in rural areas.
According to the rating of prominent World Economic Forum, Uzbekistan is among 5 countries with the fastest growing economy in the world in 2014-2015 and forecasts of growth for 2016-2017.
Besides, in 2015 Uzbekistan became one of 14 countries that have received awards for achieving of the Millennium Development Goals in food security by Food and Agriculture Organization’s (FAO) Member States.
The President had noted that work carried out in the country to improve the business climate is reflected in positive business environment rankings of international economic organizations. Last October the the World Bank published the rating of «Doing Business», with the fact that Uzbekistan in just one year has risen to 16 positions and ranked as 87th. It should be particularly underlined that according to criteria such as «Starting a Business», Uzbekistan is ranked as 42nd, «enforcing of contracts» – 32nd and «Resolving Insolvency» – 75th. According to the indicator «Getting Credit», Uzbekistan for the last three years rose from 154th to 42nd rank improving only over the last year its ranking by 63 positions.
As mentioned in the World Bank’s report, Uzbekistan is currently among the top ten countries in the world, which in the last year achieved the best results in improving the business environment.
Due to the undertaken measures, the share of small business and private entrepreneurship in gross domestic product had risen from 31% in 2000 to 56.7% at the present, or 1.8 times. This sphere now produces one third of industrial and 98% of agricultural products. It employs more than 77% of the total employed population.
The Head of State had underlined that serious attention should be paid to attraction of inward investment in implementation of projects on modernization, technical and technological renewal of industry, structural change in economy. To this end, in 2015 investments from all financing sources in the equivalent of $15.8 billion were drawn and utilized, or increase against 2014 by 9.5%. With more than $3.3 billion, or over 21% of all investments are foreign investments, of which 73% are foreign direct investments.
67.1% of all investments are channeled at industrial construction. This allowed in 2015 to complete the construction and to put into operation of 158 large production facilities with a total value of $7.4 billion.
Among facilities put into operation one can mention Ustyurt Gas Chemical Complex at Surgil deposit which had been built jointly with South Korean investors and experts. This complex is worth more than $4 billion and it is one of the most modern high-tech and large industries in the world. Its commissioning will allow to receive annually 83000 tons of polypropylene, which had previously been imported, to increase polyethylene production by 3.1 times, to employ more than one thousands of highly qualified specialists.
JSC «GM Uzbekistan» in Khorezm province had launched serial production of mini-trucks «Chevrolet Labo», overall cost of project totals approximately $6 million, and annual capacity is 5000 machines necessary for farmers and entrepreneurs. It should be mentioned that this is the third model produced at the new plant «Khorezm Auto», which had already launched production of cars «Damas» and «Orlando».
In the Pap district of Namangan province a solar photovoltaic power plant of 130 kW had been put into operation. So far this pilot project, but by 2020 the country plans to put into operation three more solar power plants of 100 MW each.
High-speed passenger train line from Samarkand to Karshi had been opened and it allows to organize the running of high-speed trains «Afrosiyob» from Tashkent to Karshi. As a result the passengers transportation duration from the capital to Kashkadarya province and back reduced twice.
The profound structural changes are taking place in agriculture of Uzbekistan. Through hard work and skills of farmers despite the difficult weather conditions Uzbekistan managed to grow and harvest a rich crop of agricultural products – produced more than 7.5 million tons of grain, more than 3.35 million tons of cotton.
The average yield of wheat in country reached 55 quintals per hectare and in some areas even reached 60-77 quintals per hectare, which is a great achievement of Uzbek farmers.
Besides, the rapidly developing sectors of agriculture such as horticulture, gardening, viticulture and cattle breeding. Last year, 12,59 million tons of vegetables, including potatoes, 1.85 million tonnes of melons, 1.56 million tons of grapes, 2.73 million tons of fruits had been harvested.
In 2015 the service sector had provided more than half of gross domestic product. Currently, its share in GDP reached 54.5% compared to 49% in 2010. This area employs more than half of the total employed population.
Banking, insurance, leasing, consulting and other kinds of market services contributing to the development of the private sector and small business in country are booming as well. In this sphere there are 80.4 thousand small businesses, accounting for more than 80% of the total number of service industries.
In 2015 the banking system was further strengthened by increasing level of capitalization and expansion of investment activity of banks. The total capital of banking system increased in comparison with 2014 year by 23.3% and reached 7.8 trillion soums. Over the last 5 years this figure increased by 2.4 times. The capital adequacy ratio of the banking system is almost 24%, which is 3 times higher than generally accepted international standards, and its liquidity – 2 times higher than the highest indicator estimates.
The outcomes achieved in 2015 sustained high rates of economic growth that created a solid basis for further income growth, improving living standards and quality of Uzbek people’s life.
Salaries of employees of budgetary institutions, pensions and stipends increased by 21.9%, and the real aggregate income per capita increased by 9.6%.
It should be noted that the share of income from business activity rose to 52% compared to 47.1% in 2010, significantly higher than in the CIS countries.
Uzbekistan focuses on reduction of social stratification. The income ratio of the richest 10% of the population and 10% least well-off population – the so-called «decile dispersion ratio» moves downward steadily, and in 2015 indicated 7.7, compared to 8.5 in 2010.
International indicator of the separation of income – Gini-coefficient in 2015 was 0.280 against 0.390 in 2000 and its level is much lower than in many developed and developing countries.
Income growth contributed to increased domestic consumer demand. Retail turnover increased over the year by more than 15%, and paid services – by 10.8%.
Qualitative changes have taken place in level and structure of availability of durable goods, most of which are now produced in our country. In particular, provision of families with cars grew 1.5 times in five years, the personal computers – during this period 3.9 times, air-conditioners – 1, 7 times, mobile phones – 1.6 times.
According to the World Happiness Report made in 2015 by a group of independent organizations and international experts under the auspices of United Nations, which features the ability of a country to provide its residents a happy life, out 158 countries worldwide Uzbekistan rated as 44th against 60th position in 2013.
Government’s focus over the last year was made on further reforming and improving education. Annual spending on education in Uzbekistan make up about 10-12% of GDP, which is almost 2 times higher than the relevant recommendations of UNESCO (6-7%) on the size of investment in education necessary to ensure country’s sustainable development.
As a result of the measures implemented over the past five years, maternal mortality per 100 thousand live births dropped from 23.1 to 19 cases, the child mortality rate up to 5 years – from 14.8 to 13.9 and infant mortality – from 11 to 10.7. According to these indicators, Uzbekistan has fully achieved relevant Millennium Development Goals.
Particular attention is paid in Uzbekistan to the development of physical culture and sports, which are an important and effective factor in health promotion.
In 2015 the Uzbek athletes at the world championships, Asian and other international tournaments, won more than 860 medals, including 311 gold, 274 silver and 276 bronze. Especially Uzbek athletes successfully perform in sports such as athletics, gymnastics, boxing, wrestling, judo, taekwondo, equestrian sports.
Last year the Government also on ensuring full implementation of State program «Year of attention and care for the elder generation».
More than 215,000 elderly people last year have passed free medical examination. Needy persons with disabilities have the opportunity to receive more than 11,000 prosthetic and orthopedic products and technical means of rehabilitation of high quality. About 70,000 veterans were covered by the medical examination in hospitals and health recreation and spa facilities. All centenarians of Uzbekistan who have reached the age of 100 years, received special allowance of one minimum wage added to their pensions.
Based on deep analysis of trends in global economy and realistic assessment of our resources and capabilities, Uzbekistan had set a target by 2030 to increase GDP of the country by at least 2-fold. Due to drastic structural reforms the country intends to achieve accelerated growth of industry by bringing its share in GDP to 40% against 33.5% in 2015, while share of agriculture to decrease from 16.6% to 10.8%, to reduce energy intensity of GDP by 2 times by introducing energy saving technologies nationwide.
Deep processing of cotton fiber, fruits and vegetables using modern technologies will allow to increase by 2030 production volumes demanded on domestic and foreign markets environmentally friendly finished textile and light industry products by 5.6 times, fruits and vegetables – by 5.7 fold.
In order to achieve qualitative structural changes in agriculture and development of the economy as a whole, the government of Uzbekistan focuses on gradual reduction by 2020 production and state purchases of cotton from 3.35 million tons to 3 million tons.
It is worth to claim that by reducing the production of raw cotton by 350 thousand tons about 170.5 thousand hectares of irrigated land are going to be freed. Thus, as a rule, freed land have low yield class where crop does not exceed 12-15 quintals per hectare – with the average yields nationwide 26.1 quintals per hectare. Mostly saline land and land in the foothill areas unsuitable for growing cotton get freed.
As a result of optimization of crop areas and introduction of modern agricultural technologies by 2020 Uzbekistan is to bring production of cereal crops up to 8.5 million tons with an increase of 16.4%, increase of potato production by 35%, other vegetables – 30%, fruit and grapes – 21.5%, meat – by 26.2%, milk – by 47.3%, eggs – by 74.5%, fish – by 2.5 times.
The reality of the task can be judged based on the following calculations. In order to achieve the growth of GDP 2 times for 2016-2030, it would be enough to provide average annual growth rate of 4.8%, while over the past 11 years the average GDP growth rate in the country amounted to at least 8%.
In modern conditions, in the era of the Internet and electronic Uzbekistan attaches prior attention to wide introduction of modern information and communication technologies in the fields of economy, a radical acceleration of the creation of the «Electronic Government».
Even today the ICT accounts for about 5.5% of world GDP, and according to prominent international experts estimates by 2020 this figure will exceed 9%. For example, in Republic of Korea share of the ICT sector in the country’s GDP totals more than 11.8%, in Sweden – 7%, in United States of America – 6.8%.
Despite the fact that in recent years this sector of Uzbekistan’s economy is developing rapidly. It must be recognized that the country is only at the initial stage and the ICT share accounts for only about 2% of GDP.
The President of Uzbekistan had underscored that at the present country has all necessary resources and opportunities for more rapid development of the sector, with a view of growing up professional workforce capacity trained by foreign universities operating in in Tashkent such as South Korean Inha University and education institutions of Uzbekistan.
He also informed that 2016 was proclaimed as the Year of Healthy Mother and Child. In order to implement the relevant action programme a lot of need to be done. Special attention of the programme is paid to such issues as further strengthening of protection of family, motherhood and childhood, formation and consolidation of material and technical base, personnel potential perinatal and screening centers, nursing services , increase level and quality of care for young mothers and children, creation of healthy spiritual environment in families, formation of girls’ physical health and intellectual development of compulsory education in academic lyceums and vocational colleges, their regular sport exercises.
Information:
Embassy of the Republic of Uzbekistan in Brussels http://uzbekistan.be/
