:: Economy of Uzbekistan
Along with many Commonwealth of Independent States economies, Uzbekistan's economy has recently shifted into high gear, recording 9.1% growth in the first quarter of 2007, along with a low inflation rate of 2.9%. However, Craig Murray, author of "Murder in Samarkand", suggests that official statistics about Uzbekistan are not trustworthy.
Uzbekistan has a very low GNI per capita (US$460 giving a PPP equivalent of US$1860).[15] Economic production is concentrated in commodities: Uzbekistan is now the world's fourth-largest producer and the world's second-largest exporter of cotton, as well as the seventh largest world producer of gold. It is also a regionally significant producer of natural gas, coal, copper, oil, silver, and uranium.[16] Agriculture contributes about 37% of GDP while employing 44% of the labor force.[17] Unemployment and underemployment are estimated to be at least 20%.[18]
:: Tashkent, the capital of Uzbekistan.
Facing a multitude of economic challenges upon acquiring independence, the government adopted an evolutionary reform strategy, with an emphasis on state control, reduction of imports, and self-sufficiency in energy. Since 1994, the state controlled media has repeatedly proclaimed the success of this "Uzbekistan Economic Model"[19] and suggested that it is a unique example of a smooth transition to the market economy while avoiding shock, pauperization, and stagnation.
The gradualist reform strategy has involved postponing significant macroeconomic and structural reforms. The state in the hands of the bureaucracy has remained a dominant influence in the economy. Corruption permeates the society: Uzbekistan's 2005 Index of perception of corruption is 137 out of 159 countries. A February 2006 report on the country by the International Crisis Group illustrates one aspect of this corruption:
Much of Uzbekistan’s GDP growth comes from favourable prices for certain key exports, especially cotton, gold, corn, and increasingly gas, but the revenues from these commodities are distributed among a very small circle of the ruling elite, with little or no benefit for the populace at large.[20][21] At cotton-harvest time, all students are mobilized as unpaid labour.[22]
:: Samarkand
According to the Economist Intelligence Unit, "the government is hostile to allowing the development of an independent private sector, over which it would have no control".[23] Thus, the national bourgeoisie in general, and the middle class in particular, are marginalized economically, and, consequently, politically.
The economic policies have repelled foreign investment, which is the lowest per capita in the CIS.[24] For years, the largest barrier to foreign companies entering the Uzbekistani market has been the difficulty of converting currency. In 2003, the government accepted the obligations of Article VIII under the International Monetary Fund,[25] providing for full currency convertibility. However, strict currency controls and the tightening of borders have lessened the effect of this measure.
Inflation, although lower than in the mid-1990s, remained high until 2003 (an estimated 50% in 2002 and 21.9% in 2003[26]). Tight economic policies in 2004 resulted in a drastic reduction of inflation, to 3.8% (although alternative estimates based on the price of a true market basket, put it at 15%[27]). However, the relief appears to be transient, as the IMF estimate of CPI-based inflation in Uzbekistan in 2005 is 14.1%.[28]
The government of Uzbekistan restricts foreign imports in many ways, including high import duties. Excise taxes are applied in a highly discriminatory manner to protect locally produced goods. Official tariffs are combined with unofficial, discriminatory charges resulting in total charges amounting to as much as 100 to 150% of the actual value of the product, making imported products virtually unaffordable.[29] Import substitution is an officially declared policy and the government proudly reports a reduction by a factor of two in the volume of consumer goods imported.[30] A number of CIS countries are officially exempt from Uzbekistan import duties.
The Republican Stock Exchange (RSE) 'Tashkent' opened in 1994. It houses a securities exchange, real estate traders, the national investment fund and the national securities depositary. It does not trade all joint-stock companies each month and therefore market capitalisation varies widely.
Uzbekistan's external position has been strong since 2003. Thanks in part to the recovery of world market prices of gold and cotton, the country's key export commodities, expanded natural gas and some manufacturing exports, and increasing labour migrant transfers the current account turned into a large surplus – of between 9 and 11 per cent of GDP in 2003-05 – and foreign exchange reserves, including gold, more than doubled to around US$3 billion.[32]
