In-depth country-focused analysis on Uzbekistan's economic, political and operational risk environment, complemented by detailed sector insight


Our comprehensive assessment of Uzbekistan's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Uzbekistan, as well as the latest industry developments that could impact Uzbekistan's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Uzbekistan before your competitors.

Uzbekistan Country Risk

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Core Views

  • The Kazakh economy is past the worst, with a rebound in oil prices offering support for the tenge, mitigating inflationary pressures, and allowing for monetary policy easing in the coming months. Strong sovereign position will prevent a collapse of the banking system.

  • Kyrgyzstan's economy will struggle to recover in the coming quarters despite the gradual rebound in commodity prices and rebounding Russian growth. Nevertheless, regulatory and political uncertainty, subdued remittances from Russia, and weak external demand will keep a lid on the country's recovery.

  • Economic conditions in Tajikistan will continue to deteriorate despite a gradual rebound in commodity prices in the coming quarters. While a credit line arrangement with the International Monetary Fund will help the country avoid a balance of payments...

Uzbekistan Operational Risk Coverage (9)

Uzbekistan Operational Risk

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BMI View : Uzbekistan remains a regional underperformer in terms of its trade and investment environment, with a vast array of protectionist policies, restrictions on foreign direct investment, a corrupt judicial system and extensive government intervention all undermining the potential for growth in a country boasting a wealth of natural resources. Although Uzbekistan has made progress in terms of reducing the bureaucratic burden placed on businesses, the tax system remains complex and businesses continually face threats from corruption. These factors offset, to a large extent, the enormous growth potential offered by Uzbekistan's export sector. Overall, Uzbekistan...

Uzbekistan Crime & Security

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BMI View: Uzbekistan poses multiple risks to investors with regards to crime and security, the majority of which relate to the endemic corruption which permeates at all levels of society and the country's proximity to unstable countries such as Afghanistan, which increases the threat of terrorism. Businesses therefore face considerable costs associated with bribery and extortion, while instability along Uzbekistan's borders increases conflict risks. Uzbekistan receives a score of 31.0 out of 100 for overall Crime and Security Risk, placing it second from bottom out of 31 states in Emerging Europe.

High Risk Operating Environment
Uzbekistan & Emerging Europe Regional Average - Crime And Security Risk Scores

Uzbekistan Labour Market

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BMI View: Uzbekistan has one of the least attractive labour markets in Emerging Europe. The low quality of education at school level is further exacerbated by high emigration rates among tertiary graduates which results in a lack of highly skilled labour. Further, labour availability is reduced by the large size of the informal sector, low urbanisation rates, and low female participation rates. Companies which operate in Uzbekistan will face high employment costs. Conversely, it is fairly easy to employ foreign nationals in Uzbekistan. As a result, Uzbekistan scores a low score of 41.5 out of 100, ranking the country in 30th place out of 31 Emerging Europe states.

Highly Unattractive Labour Market
Uzbekistan and Regional Average Labour Market Risk

Uzbekistan Logistics

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BMI View: Uzbekistan is the regional underperformer in relation to logistics risk, as businesses will face threats to successful operation and efficient supply chain performance on all fronts. The country's landlocked status and inferior road connections mean that domestic and international transport for many types of goods is severely lengthy, costly and quite dangerous. Rail connections are somewhat more extensive and of better quality, but international supply chains will still experience onerous and expensive customs procedures when exiting or entering Uzbekistan which will erode any time or cost benefit gained. Day-to-day business operation has high potential to be hampered by fuel, water and electricity shortages, with limited and slow internet connection further frustrating this problem. Consequently, Uzbekistan ranks firmly in last place...

Uzbekistan Trade & Investment

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Although it has enjoyed economic growth above 7% for the past three years, Uzbekistan is a challenging investment destination, with foreign direct investment (FDI) into the country faltering in recent years. Key deterrents for investors include a deeply corrupt and inefficient public administration, stifling border controls and high levels of government involvement in private economic activity. However, a stable financial system and lucrative natural resource opportunities mean investors are likely to continue to take an interest in the country.

We have given Uzbekistan a score of 40.8 out of 100 for Trade and Investment Risks in our Logistics Risk Index. This is low by regional standards, putting Uzbekistan ahead only of Kyrgyzstan and Tajikistan. Uzbekistan's poor performance results from a number of factors, with a government policy of discouraging and replacing imports probably the most serious issue facing the country, particularly as it...

Uzbekistan Industry Coverage (9)

Uzbekistan Autos

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BMI View: A combination of a still-sluggish economy and a weakening currency will lead to further challenges for the Kazakh new vehicle sales market in 2016. We are forecasting 2% sales growth for the sector as a whole, with commercial vehicles set to outperform passenger cars. For Uzbekistan, the near-term outlook is also challenging and we are forecasting 1.5% sales growth for the sector, with commercial vehicles again set to outperform passenger cars.

Vehicle Sales By Country
f = BMI forecast. Source:...

Uzbekistan Defence & Security

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BMI View: Kazakhstan's determination to develop a solid domestic defence manufacturing base has been exemplified in its strong push to setting up numerous joint ventures and partnerships with key foreign industry players as well as its efforts to organise its own international exhibition of weapons and military equipment - KADEX. With a somewhat unstable regional environment, Kazakhstan will see to its defence expenditure being increased over our forecast period in an effort to be ready to combat any potential breaches in security. However, BMI believes that if it is to truly excel in this field and achieve its goal of creating a strong...

Uzbekistan Infrastructure

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BMI View: Construction sector growth in 2016 received a boost as several major projects moved along the pipeline. However, the outlook is volatile amid continued economic headwinds and political instability.

Forecast and Industry Developments

  • We have significantly increased our 2016 forecast for Uzbek construction sector growth to average 6.4% in 2016, after national statistics reported 19% growth in Q116.

  • 2017 onwards remains unclear as economic headwinds persist, combined with political instability as new leadership emerges after President Karimov's hospitalisation.

  • Uzbekistan announced a five-year USD55bn plan to carry out 900 projects to modernise industrial facilities and build infrastructure, especially in the gas...

Uzbekistan Oil & Gas

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BMI View: Our outlook for Uzbekistan's gas sector remains positive as we expect gas production and export figures to remain strong across our forecast period to 2024. However, the country's oil sector will continue on a downward slope leaving the country increasingly more dependent on refined fuels imports and subjecting it to potential fuel shortages.

Headline Forecasts (Uzbekistan 2013-2019)
2013e 2014e 2015f 2016f

Uzbekistan Petrochemicals

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While Uzbekistan and Kazakhstan are set to open new petrochemicals facilities, there are strong downside risks associated with depressed export markets, uncompetitive feedstock prices and sluggish domestic demand. Investment decisions are being postponed and plant construction is being delayed due to ongoing problems facing the Central Asian economies.

In 2015, Central Asia's petrochemicals capacities include 240,000 tonnes per annum (tpa) ethylene, 125,000tpa polyethylene (PE) and 120,000tpa polypropylene (PP). The size of the industry was far less than the size of just one world-scale petrochemicals complex in the Middle East, yet Central Asia is only just leveraging its significant potential in terms of feedstock due to massive upstream resources.

  • Uzbekistan should begin commercial operations in 2016 at an ethane cracker with capacity to produce 400,000tpa of ethylene as well as downstream units with...

Uzbekistan Pharmaceuticals & Healthcare

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BMI View: Ongoing economic development and a large population will increase the appeal of the Uzbek healthcare and pharmaceutical sector to foreign companies over the long term. Although most pharmaceutical sub-sectors, including patented products, will observe sales growth over the forecast period, low spending per capita on medicine and the poor regulatory environment mean generic drugs will continue to play a major role in Uzbekistan's drug market in the coming years. While local drug manufacturing and exports will continue to increase, Uzbekistan will remain strongly dependent on drug imports in the foreseeable future.

Headline Expenditure Projections

  • Pharmaceuticals:...

Uzbekistan Power

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BMI View: Gas-fired power will remain the dominant source of power in Uzbekistan over our 10-year forecast period through to 2025, as robust gas production and limited gas export opportunities weaken the government resolve to diversify the Uzbek power mix. The aim to privatise certain power assets to raise cash and spur investment, amid the country's economic malaise, will register limited success due to structural challenges muting investor interest for such assets.

Latest Updates And Structural Trends

  • Uzbekistan is currently attempting to undertake a privatisation of its power sector - whereby 10 construction firms operating under the umbrella of Uzbekenergo are to sell off 15% or more of their shares to foreign investors. We do not investor interest to be robust for power sector assets, as a result of a...

Uzbekistan Telecommunications

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BMI View: We maintain a cautiously optimistic outlook for the Central Asian telecommunications market as a whole. There are some growth opportunities in the region, particularly with regard to 3G and 4G technology Uptake. Nevertheless, state interference and political risk remains the most important risk of doing business in the Central Asian region. This was again amplified as government involvement became a key theme over the course of 2015. In Turkmenistan, a new state-owned company was created to spur competition, in Kyrgyzstan, state-owned Kyrgyz Mobile Company was sold to state-owned MegaCom and in Uzbekistan, state-owned Uzmobile launched a GSM network to better...

Uzbekistan Telecommunications

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BMI View: In Uzbekistan and Turkmenistan, government plays a pivotal role in driving telecoms sector development. In December 2015,Uzbekistan's Ministry for Development of Information Technologies and Communication announced plans to invest USD883.7mn over the coming four years in nine investment projects. This is in line with efforts to enhance broadband access by 2020. The projects will focus on developing HSPA+ and LTE networks, extending fixed and mobile infrastructure, including expanding backbone and transmission networks and installing fibre-optic lines as well as launching new multimedia services. Meanwhile, in Turkmenistan's much less competitive telecoms market, the...

Latest Uzbekistan Articles

Latest Uzbekistan Blogs

  • China's ambitious plan to build connections with Europe and the Middle East...


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