Economic Growth in Uzbekistan: Sources and Potential

Abstract

his study provides an analysis of the sources of Uzbekistan’s economic growth, the challenges and opportunities for the private sector in those sectors, and policy measures that would support the expansion of the economy. It is specifically intended to provide an analysis of the macroeconomic issues surrounding the reforms needed to meet the Government's Living Standard Strategy (LSS) growth target, as well as to identify existing policy and structural constraints and macroeconomic policy reforms measures that would help to remove those constraints. The indicative forecasts of Uzbekistan’s economy presented in this report have been generating by two macroeconomic simulation models that were developed as part of the present economic growth analysis for Uzbekistan. The first is a Revised Minimum Standard Model - eXtended (RMSM-X) that provides a simple spreadsheet-based tool for feasibility and sustainability analysis of the economy of Uzbekistan. The present RMSM-X model for Uzbekistan has been modified from other models of this type in a number of ways to accommodate existing data constraints of the country. Essentially, a number of key economic indicators used in Uzbekistan replaced some of the standard indicators used in the RMSM-X model, while others used in the RMSM-X model for which data were not available in Uzbekistan needed to be eliminated and some of the relationships in the system altered to accommodate the changes. The second macroeconomic simulation model that has been developed for Uzbekistan also provides a parsimonious representation of the macro economy using a simple spreadsheet framework for making rational and consistent predictions about Uzbekistan’s overall economic activity, the standard components of the balance of payments, the expenditure concepts of the national accounts, and the financial sector balances. The model applies a conventional framework to the economic system and, as a policy-oriented system it incorporates key parameters for policy formulation