Economy - overview: Uzbekistan is a doubly landlocked country in which 51% of the population lives in urban settlements; the agriculture-rich Fergana Valley, in which Uzbekistan’s eastern borders are situated, has been counted among the most densely populated parts of Central Asia. Since its independence in September 1991, the government has largely maintained its Soviet-style command economy with subsidies and tight controls on production, prices, and access to foreign currency. Despite ongoing efforts to diversify crops, Uzbek agriculture remains largely centered on cotton; Uzbekistan is the world's fifth-largest cotton exporter and seventh-largest producer. Uzbekistan's growth has been driven primarily by state-led investments, and export of natural gas, gold, and cotton provides a significant share of foreign exchange earnings. In early 2016, Russia’s Gazprom announced it planned to increase purchases of Uzbek gas.
Aware of the need to improve the investment climate, the government is taking incremental steps to reform the business sector and address impediments to foreign investment in the country. Since the death of first President Islam KARIMOV, rhetorical emphasis on such initiatives and ostensible government efforts to seek input from the private sector have increased. In the past, Uzbek authorities have accused US and other foreign companies operating in Uzbekistan of violating Uzbek laws and have frozen and seized their assets. At the same time, the Uzbek Government has actively courted several major US and international corporations, offering financing and tax advantages.
In 2003, the government accepted Article VIII obligations under the IMF, providing for full currency convertibility. However, strict currency controls and tightening of borders have lessened the effects of convertibility and have also led to some shortages that have further stifled economic activity, and the government has lately raised the issue of currency reform in a number of official decrees and proclamations. Recently, lower global commodity prices and economic slowdown in neighboring Russia and China have been hurting Uzbekistan's trade and investment and worsening its problem of foreign currency shortage.
Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.
Source: CIA World Factbook - This page was last updated on July 9, 2017