Uzbekistan’s positive outlook is predicated on significant investment growth and a gradual recovery of commodities prices which are expected to edge up export revenues. With prospects for recovery in the external environment being sluggish, GDP growth is projected to slow from 8 percent in 2015 to an average 7.4 percent per year over the medium term.

Uzbekistan’s GDP growth is expected to slow down only marginally in 2016, as the impact of lower commod ity prices and weak economic performance of the country’s largest trading partners is offset by government’s countercyclical fiscal and monetary policies, says the World Bank ECA Economic Update.

The current and the fiscal accounts remain positive. The migrants that have returned from Russia and the lower USD remittances are nevertheless expected to put pressure on the labor market and to slow the pace of poverty reduction in the medium term.

Continued recession in Russia — Uzbekistan’s second largest trading partner and its primary source of remittances, — slowing growth in China (Uzbekistan’s largest trading partner), and declining prices of Uzbekistan’s export commodities (natural gas, copper, and cotton) all contributed to a slight reduction in Uzbekistan’s GDP growth in 2016.

Growth slowed to 7.8 percent (y/y) in the first half of 2016, compared with 8.1 percent (y/y) in the same period in 2015. Private consumption remained weak, as income eroded due to persistently high inflation and a 19 percent (y/y) fall in remittances from Russia (as measured in US dollar terms). By contrast, robust investment activity (discussed below), stimulated by some tax relief, supported growth.