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.

Country Risk

Uzbekistan Country Risk

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  • We believe the deteriorating domestic demand outlook for Central Asia will make the region more susceptible to Islamist radicalisation. Out of the five Central Asian states - Kazakhstan, Turkmenistan, Uzbekistan, Kyrgyzstan and Tajikistan, we believe the latter two to be most exposed to the threat of radicalisation.

  • We expect the Kyrgyz som to remain on a more gradual depreciatory trajectory in 2015 than its Tajik counterpart. The Kyrgyzstani economy faces more limited depreciatory pressure from falling remittance inflows and smaller inflation costs, while the authorities face higher political pressure than Tajikistan, underpinning our view.

  • Tajikistan's social and political scene will become increasingly unstable in the coming quarters, as the country grapples with the shock stemming from Russia's economic crisis...

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Uzbekistan Operational Risk Coverage (9)

Uzbekistan Operational Risk

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BMI View: Issues relating to security and trade are key risks to incoming businesses and investors. In particular, the government's commitment to export-led growth and fostering domestic industries results in considerable difficulties for those who wish to bring goods into the country, throttling development. The utilities market also faces huge challenges due to worsening shortages of energy sources and water. Against these disadvantages, there are a number of factors in favour of investing in Uzbekistan, including low labour costs and a sizeable market in a country enjoying strong economic growth. Uzbekistan achieves an overall score of 38.3 out of 100 in our Operational Risk Index, ...

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Uzbekistan Crime & Security

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Uzbekistan poses a high degree of security risks to foreign business travellers, expatriates, and tourists. For the most part, the greatest risks to these groups are petty crime such as pick-pocketing and theft, rather than violent crimes. Uzbekistan's murder rate, at 3.7 per 100,000 in 2012, was significantly lower than its fellow Central Asian republics Kazakhstan and Kyrgyzstan, where the rate is around nine per 100,000. Organised crime and drug-related crime also exist in Uzbekistan, but are unlikely to affect foreigners. Corruption is a major problem in Uzbekistan, and erodes the integrity of the country's law enforcement agencies.

Terrorism poses a significant threat to the Uzbek state, and combating this is arguably the government's top security priority. The main threat has stemmed from the Islamic Movement of Uzbekistan (IMU), although a major crackdown drove its militants into neighbouring countries. Uzbekistan's adjacency to...

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Uzbekistan Labour Market

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There are significant risks to investors associated with both the labour market and the education system, with particular problems including low levels of workforce participation, low levels of secondary school enrolment and poor educational attainment by those who do attend. These disadvantages are compensated for somewhat by the benefits of a cheap and flexible workforce. We have awarded Uzbekistan a score of 45.2 for Labour Risk, putting it close to the bottom of the table when compared to regional peers; only Albania and Bosnia-Herzegovina perform worse.

Weaknesses in the availability of labour are perhaps the most disappointing element of the employment landscape in Uzbekistan, given the country's strong economic growth, low costs and flexible legal regime. Despite a good level of female employment, participation in the workforce is 54.4%, the third lowest proportion in the region. Causes include the country's low level of urbanisation...

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Uzbekistan Logistics

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...

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Uzbekistan Industry Coverage (6)


Uzbekistan Autos

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BMI View:  BMI's outlook on auto production and sales in Kazakhstan and Uzbekistan remains positive, despite a slowdown in sales figures in the first eight months of 2014. Both countries boast solid macroeconomic fundamentals and both are seeing strong demand for cars from their citizens.

Turning to production first, Kazakh auto production looks set for strong growth over BMI's five-year forecast period to 2017. This reflects new production plans by carmakers  Toyota Motor and Russia's AvtoVAZ and Kazakh AutoBIPEK.

Kazakh auto production looks set for strong growth over BMI's forecast period to 2018. We estimate...

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Defence & Security

Uzbekistan Defence & Security

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BMI View:  At present, Kazakhstan and the other four Central Asia countries, Turkmenistan, Tajikistan, Uzbekistan, and Kyrgyzstan have limited defence budgets, yet numerous requirements. While BMI expects these budgets to increase incrementally over the coming years, BMI also expects the budgetary and underdevelopment challenges to limit those increases considerably. These countries face numerous internal and external security challenges, including border disputes, criminality, and domestic and transnational terrorism.

BMI expects Kazakhstan's defence spending to have reached USD2.4bn by the end of 2014 and USD2.6bn by the end of 2015. While...

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Oil & Gas

Uzbekistan Oil & Gas


Uzbekistan Petrochemicals

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Russia's economic problems stemming from its trade war with the West are having a negative impact on the Central Asian petrochemicals market with Kazakhstan's imports dropping sharply in 2014. BMI's latest Kazakhstan and Uzbekistan Petrochemicals Report anticipates further falls in imports as both states prepare for a surge in capacity in 2016.

Both Kazakhstan and Uzbekistan will have sufficient production to cover domestic needs with a surplus likely to stimulate polymers conversion and boost exports. The Central Asian market is robust and growing fast, providing a sound basis for new petrochemicals capacities.

Most consumption will be focused on finished products with a lack of domestic plastics converters to fulfil demand. This could change as domestic petrochemicals capacities evolve, enabling local sourcing of cheap raw material for the manufacturing of end products.

  • The ongoing...

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Pharmaceuticals & Healthcare

Uzbekistan Pharmaceuticals & Healthcare

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BMI View: Against a backdrop of regional economic instability, we see moderate scope for short-term improvements to the business environment in Uzbekistan, which poses downside risks to the country's pharmaceutical sector growth forecasts. However, Uzbekistan's relatively high economic growth rates, although decelerating, will continue to allow the government to pursue policies aimed at economic diversification and modernisation, including the promotion of pharmaceutical manufacturing through private sector strengthening, joint ventures and incentives to attract foreign investment and technology transfer.

Headline Expenditure Projections

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Uzbekistan Telecommunications

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BMI View: Mobile number portability looks set to become a major trend throughout the Central Asian region, as a number of regulators look to introduce it. Kazakhstan and Kyrgyzstan have reached a saturation point in terms of mobile subscribers and the launch of MNP will facilitate increased competition between operators, encouraging innovative tariff plans and likely driving down ARPUs. MNP is less of a concern in Uzbekistan and Turkmenistan, where organic growth prospects remain. Transitions to 3G will continue to be vital across the region and though 4G is available, it will remain too expensive for mass uptake. Government interference in the sector remains the key risk in the telecoms industry, however, and we tend to believe that this high risk outweighs the potential rewards at the time.


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