Global investors cite optimism for Uzbekistan post COVID-19

A special webinar on Wednesday brought together over 230 executives, investors, officials, and analysts from 27 countries for presentations and discussions on the impact of COVID-19 on Uzbekistan’s economy.

The meeting, which was streamed via Zoom and YouTube, was opened by Ambassador Said Rustamov, Uzbekistan’s envoy to the United Kingdom. The ambassador noted the swift action taken by the Uzbek government to place the country in full lockdown and described the complex process beginning now to return the economy a more normal state, including through the eventual resumption of international travel.

A poll conducted during the webinar revealed a high level of optimism for the outlook of the Uzbek economy. Of the 123 unique respondents, 77 percent (94 respondents) believed that Uzbekistan will be “more attractive” as a destination for foreign investors when “compared with other frontier and emerging markets.” Of this total, 18 percent (22 respondents) felt Uzbekistan would be “significantly more attractive” than other markets.

This optimistic assessment may reflect the underlying resilience of the Uzbek economy described by the speakers. Oybek Shaykhov, secretary general of the Europe-Uzbekistan Association for Economic Cooperation (EUROUZ) pointed to several fundamental sources of Uzbekistan’s economic resilience, including the country’s strategic natural resources, particularly gold.  

Shaykhov also highlighted that the success of the Uzbek government in responding to the COVID-19 crisis will only augment this underlying resilience and that the government’s response to date suggests that the reform agenda has led to practical improvements in state capacity.

However, the Uzbek economy still faces significant internal and external challenges stemming from the global slowdown. The webinar audience indicated equal concern regarding employment and foreign investment, with each category being identified as the “most significant area of concern for the Uzbek economy” by 28 percent of respondents.

The emphasis on employment corresponds to analysis produced by Center for Economic Research and Reforms (CERR), explained Umid Abidhajaev, deputy director of the center and one of the webinar speakers. During his presentation, Abidhajaev cited a survey of over 6000 Uzbek citizens in which 46 percent said they expect employment to be negatively impacted by the COVID-19 crisis. But Abidhajaev is confident of a quick recovery, noting that to date, 91 percent of industrial firms in Uzbekistan have resumed activities in addition to 76 percent of construction firms, suggesting that demand for labor will rebound in the short-term.

Projections from international financial institutions such as the IMF and EBRD support the view that Uzbekistan will experience a “v-shaped recovery,” rebounding to between 6 and 7 percent growth next year.

Louis Skyner, Chairman of the British-Uzbek Society, which convened the webinar meeting, highlighted the “genuine synergy between companies and banks and people” in Uzbekistan that will be attractive to foreign investors increasingly worried about systemic weaknesses in frontier and emerging markets. Skyner also noted that while Uzbekistan is in a strong position to continue receiving financial support from international lenders, it also has the ability to tap into domestic resources, particularly if the Uzbek government remains committed to privatization efforts and the development of capital markets.

The view that the COVID-19 crisis has taught important lessons for the Uzbek government, private sector, and general public was echoed by Eldor Mannopov, managing partner for Dentons Tashkent, who explained that while “COVID-19 has been a test for both public health and economic health” in Uzbekistan, the experience will see “the immune system of the economy improve and more opportunities arise.”

The webinar was organized by Eurasian Investor and Adam Smith Conferences, in partnership with the British-Uzbek Society and the Europe-Uzbekistan Association for Economic Cooperation. Eurasian Investor is the organizer of the UzInvest Forum, the landmark international conference, which took place in November of last year. Further webinars are planned as part of a new series of digital events focused on the economies of Russia, Central Asia, and the Caucasus.

Photo: Gelio