CERR survey reveals positive outlook among entrepreneurs
According to the latest survey conducted by the Center for Economic Research and Reforms (CERR), the business climate in Uzbekistan has improved in November 2023, reflecting the positive impact of the ongoing economic reforms in the country. The survey, which covers 1,000 entrepreneurs from various sectors of the economy, shows that the consolidated business climate indicator increased by 4 points compared to the previous month and reached 57 points on a scale from -100 to +100. A value above 0 points means an increase in business activity and vice versa.
The survey also reveals that the entrepreneurs are optimistic about the current state and future prospects of their businesses. In particular, 41% of the respondents rated the current state of their businesses as “good”, while 20% of them expected to increase the number of employees in the next three months. Moreover, 41% of the entrepreneurs reported an increase in demand for their goods and services in November, while 36% of them planned to increase their production or sales in the next three months.
The CERR survey is based on the methodology of the German Business Climate Index (Geschäftsklimaindex), which was developed with the assistance of the Institute of Economic Research “Ifo Institut” and the consulting company “Berlin Economics”. The survey aims to measure the perceptions and expectations of the entrepreneurs regarding the business climate in Uzbekistan, as well as to identify the main obstacles and challenges they face in doing business.
Economic reforms boost business confidence and performance
The improvement of the business climate in Uzbekistan is largely attributed to the economic reforms that have been implemented by the government since 2016. These reforms include the liberalization of the foreign exchange market, the simplification of the tax system, the reduction of the state’s role in the economy, the enhancement of the legal and institutional framework for private sector development, and the promotion of foreign trade and investment.
As a result of these reforms, Uzbekistan has achieved significant progress in various economic indicators and rankings. For instance, the country’s GDP growth rate reached 5.8% in 2022, while the inflation rate declined to 9.5%. Moreover, Uzbekistan improved its position in the World Bank’s Doing Business report by 13 places in 2023, ranking 69th out of 190 countries. The country also ranked 69th out of 141 countries in the World Economic Forum’s Global Competitiveness Index in 2023, up by 7 places from 2022.
The economic reforms have also stimulated the development of the private sector, especially the small and medium-sized enterprises (SMEs), which account for about 60% of the country’s GDP and 80% of its employment. According to the State Statistics Committee, the number of SMEs increased by 12.4% in 2022, reaching 328,000 units. The SMEs also increased their share in the country’s exports by 14.6% in 2022, reaching 28.4% of the total exports.
Challenges and opportunities for further improvement
Despite the positive trends in the business climate, the CERR survey also indicates that the entrepreneurs still face some difficulties and barriers in doing business in Uzbekistan. The most pressing problems reported by the respondents are the access to finance and land plots, the interruptions in the electricity and gas supply system, and the tax administration and rates.
To address these issues, the government has adopted several measures and initiatives, such as the establishment of the Development Bank of Uzbekistan, the allocation of 20% of the state-owned land plots for SMEs, the introduction of the Smart Metering system for electricity and gas consumption, and the adoption of the new Tax Code in 2023. However, the implementation and effectiveness of these measures need to be monitored and evaluated regularly, as well as complemented by other reforms and policies that can further improve the business environment and competitiveness of the country.
One of the main opportunities for enhancing the business climate in Uzbekistan is to leverage the potential of the digital economy and innovation. According to the World Bank, the digital economy can contribute up to 8% of the country’s GDP by 2025, while creating new jobs and markets, improving public services and governance, and increasing social inclusion and welfare. To realize this potential, the government has launched the Digital Uzbekistan 2030 strategy, which aims to transform the country into a regional leader in digital development and innovation. The strategy focuses on four pillars: digital infrastructure, digital skills, digital platforms, and digital entrepreneurship.
Another opportunity for improving the business climate is to strengthen the regional and international integration of Uzbekistan. The country has been actively pursuing a more open and constructive foreign policy, which has resulted in the expansion and diversification of its trade and investment relations, as well as the resolution of some longstanding disputes with its neighbors. The country has also joined several regional and global initiatives and organizations, such as the Central Asia Regional Economic Cooperation (CAREC), the World Trade Organization (WTO), and the Eurasian Economic Union (EAEU). These initiatives and organizations can provide Uzbekistan with access to larger and more dynamic markets, as well as to best practices and standards in various fields of economic activity.
