World Bank downgrades GDP growth projection for Uzbekistan to 1.6% in 2020

AKIPRESS.COM - The COVID-19 outbreak is a severe disruption to Uzbekistan's economy and its transition to a market economy. Growth is projected to reduce sharply to around 1.6 per-cent based on latest estimates in 2020 as a result of significantly lower external trade and widespread domestic economic disruption, according to the World Bank ECA Economic Update Spring 2020.
Stay-at-home orders and non-critical business closures are now in place across the country. It is uncertain when these restrictions will be lifted as efforts intensify to reduce local transmission. An increasingly likely downside scenario is that more prolonged disruption could contract the economy in 2020. On the positive side, demand for gold and food exports is projected to remain robust, but it may be subject to significant price volatility.
Annual inflation is expected to be 15.8 percent in 2020 as a result of supply chain disruptions and higher food prices. The current account deficit is expected to widen to around 8.5 percent of GDP in 2020 due to a sharp con-traction in external trade and remittance inflows.
A drawdown on reserves and development partner assistance is expected to finance the deficit.
The government recently announced a $1 billion package to increase health and social spending, and ease tax, debt, and cash flow constraints on businesses. This will help temper the negative effects of the crisis on households and firms. Lower tax revenues and additional crisis spending are expected to increase the fiscal deficit to 5.6 percent of GDP in 2020 and 4.7 percent of GDP in 2021.
The effect of the COVID-19 outbreak on the drivers of poverty reduction, such as income growth and remittances, is likely to increase poverty levels in 2020.