Russia's GDP was expected to decline approximately at the level of the fourth quarter of 2020 - 1.8%. This causes the instability of the foreign economic environment for the economy of Uzbekistan. However, the preliminary results of the first quarter of the Uzbek economy testify to its dynamic and confident economic growth.

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Production dynamics

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Gross Domestic Product (GDP) increased by 3% in the first three months of 2021. All sectors of the economy showed an increase in production. (For comparison: in early April, Bloomberg Economics experts reported that they expect the world economy to grow in the first quarter by only 1.3%).

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In the industrial sector, there was an increase in output to 3.8% against 1.9% in the same period of the previous year. This was due to a slowdown in the mining industry from 13.3% to 0.1%, an increase in the manufacturing industry by 4.6%, an acceleration of production in the electricity, gas, steam and air conditioning sector from 7.9% in the first quarter of 2020 to 10.1% in the current one. At the same time, the share of high-tech industries in the structure of the manufacturing industry increased to 2.5% compared to 1.9% in January-March 2020.

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In the first quarter of this year compared to the first quarter of 2020, the production of motor gasoline increased by 3.0%, cotton yarn by 12.4%. The index of the metallurgical industry production increased - by 7.9%, food products - by 7.5%, textiles - by 19.1%, chemical products - by 20.5%.

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Service and trade

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The growth in the service sector amounted to 5.8% in January-March 2021. The highest indicators were achieved in education services (21.3%), financial services (19.1%), rental (16.6%), communication and information services (15.8%). There has been some reduction in transport services due to continuing restrictions. Nevertheless, there is an acceleration in the growth of freight turnover to 2.8%, but at the same time, passenger turnover has slightly decreased - by 3.8%. Retail trade in the first three months grew by 2.8% with a slight slowdown compared to the same period last year (3.8%).

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Exchange trade also grew dynamically in the first quarter. The total volume of transactions concluded in the I-quarter of 2021 on all trading platforms of the Uzbek Republican Commodity and Raw Materials Exchange JSC exceeded the same indicator for the I-quarter of 2020 by 47.5%. The volume of transactions involving small businesses and private entrepreneurship increased by 34.6%. The total amount of goods sold through the exchange for export amounted to USD 43.3 million, which is 2.9 times more than in the first quarter of 2020. The total volume of completed e-government procurement transactions increased by 74.7%. At the same time, the savings of budgetary and corporate customers also increased by 54.2%.

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At the same time, as indicated by the Central Bank, above trends contributed to the stability of the domestic foreign exchange market, and as of April 1, 2021, the devaluation of the national currency rate since the beginning of the year was 0.2%.

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Investment, income and inflation

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The first quarter in the area of ​​investments. The decline has slowed from 11.2% in the first quarter of 2020 to 3.5% this year. Investments with the budget expense and government loans decreased, the share of the total investments volume decreased from 18% in the first quarter of 2020 to 6.2% this year. At the same time, investments from non-centralized sources grew by 13.6% over the corresponding period last year. Foreign direct investment and loans increased by 30.6%, investments at the expense of the population - by 20%, enterprises - by 6.3%. In addition, commercial banks issued loans by 11% more compared to the same period last year.

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Population income. In the first quarter of this year, there was a significant increase in wages. The average monthly wage of workers in industrial enterprises (excluding small businesses) in January-March 2021 compared to the same period in 2020 increased by 3.9%, in construction - by 17.6%, in trade - by 13.7%, in the sector of information and communication - by 16.0%, in the sphere of financial and insurance activities - by 19.4%, in education - by 7.5%, in health care and provision of social services - by 13.1%.

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The rate of inflation continues to slow down, the rise in prices in the first quarter amounted to 2.5%, while in the same period of 2020 - 2.8%. The growth in food products’ prices remains to increase, which is affected by the yield and logistics of foreign markets, however, compared to the same period last year, there is a significant slowdown in the growth rate of prices for them (for the first 3 months of 2020 by 4.3%). The rise in prices for non-food products remained at the level of 1.7%, while prices for services increased by 2.7%, which is probably due to the fact that certain restrictions continue to remain in this area. According to the Central Bank, the gradual decline in inflation expectations is due to the decline in their pandemic-related incidence.

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Business activity

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A number of indicators have been developed and are actively used to assess the activity of a business in Uzbekistan. And all these indicators indicate that business activity was growing and its expectations were improving in the first quarter of this year.

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The business activity index (BAI) is calculated by the Center for Economic Research and Reforms and takes into account the number of transactions in the bank accounts of business entities, the intensity of purchasing raw materials on the commodity exchange, The component of operating economic entities and the dynamics of brand registration.

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The sharpest growth in BAI since the beginning of the pandemic occurred in February this year, when the index rose by 9.9% compared to January and 3.4% compared to February last year, but the March figure has already surpassed this record.

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BAI in March 2021 increased by 12.7% compared to the previous month and by 18.7% compared to March last year (the month when the pandemic began) reaching to 1127 points. This means that business activity in Uzbekistan has already overcome the decline caused by the pandemic and reached its maximum values at the end of this quarter.

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The number of transactions on bank accounts of business entities increased by 15.7% in March; the intensity of the purchase of raw materials on the exchange by 10.2%; and the number of new brands - by 44.4%. At the same time, business activity increased in all regions as compared to the previous month. The most significant growth was observed in the Republic of Karakalpakstan (45.3%), Andijan (27.0%), Jizzakh (20.7%) and Khorezm (20.0%) regions.

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Conclusion

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Thus, the main economic and indirect indicators of the first quarter show that the Uzbek economy has already entered the trajectory of strong economic growth, while it is improving a number of its structural positions.

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It should be noted that, during the pandemic the economic reforms continued actively and increased the stability, competitiveness of the Uzbek economy. At this stage, another clear evidence that the rapid recovery of the Uzbek economy is linked to the effectiveness of reforms in recent years is the inclusion of Uzbekistan in the international ranking of "Best Countries" for the first time in its history.

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According to the Central Bank of the Republic of Uzbekistan, “In 2021, real GDP growth is expected to be in the range of 4.5-5.5%. At the same time, the updated forecasts show that economic growth is approaching the upper limits of this forecast corridor”. Given that these expectations are much higher this year than in many countries around the world, such expectations are fully.

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Viktor Abaturov, expert at the Center for Economic Research and Reforms