Moody’s Highlights Uzbekistan’s Progress in Institutional Reforms

Tashkent, Uzbekistan (UzDaily.com) — International rating agency Moody’s has published its annual sovereign outlook for 2026 for countries in Eastern Europe and Central Asia, assigning a positive overall outlook for the region’s credit fundamentals.

The agency forecasts that the strengthening of institutional reforms, economic diversification, and deeper regional integration will be key factors supporting the majority of sovereigns.

The report pays particular attention to Central Asia, where Uzbekistan (rating Ba3, Positive outlook) is highlighted as an example of a country actively implementing institutional transformations. Moody’s notes that most Central Asian economies, including Kazakhstan (Baa1, Stable), Kyrgyzstan (B3, Positive), and Tajikistan (B3, Positive), continue to make progress in institutional reforms, which is considered an important factor in improving credit profiles.

In Uzbekistan, the continuation of restructuring state-owned enterprises and banks, aligning corporate governance with international standards, and gradual advancement of the privatization program are expected. Simultaneously, the authorities continue efforts to join the World Trade Organization (WTO), deepening market liberalization and trade integration.

According to Moody’s, median real GDP growth in the region in 2026 is expected to remain high at 3.8%, with Central Asian and Caucasus countries demonstrating particularly strong growth. This dynamic expansion is driven not only by domestic economic factors but also by active diversification and deeper regional integration.

For Uzbekistan and neighboring countries, the development of trade and transit networks, including the “Middle Corridor,” plays a key role in strengthening long-term prospects, supporting growth, and enhancing regional resilience to external economic shocks.

Moody’s also forecasts active growth in green energy in Azerbaijan, Uzbekistan, and Kazakhstan in 2026, including the expansion of competitive electricity markets and attracting private investment in renewable energy. Countries rich in hydro resources, such as Tajikistan and Kyrgyzstan, are likely to increase investment in dam projects with support from international financial institutions to expand electricity exports within the region.

The agency emphasizes that Central Asian countries have taken significant steps to mitigate risks associated with the Russian-Ukrainian conflict by diversifying energy and economic ties. Fiscal stability in the region remains strong, with financial balances, debt levels, and debt servicing indicators maintaining a sustainable level.

However, Moody’s notes potential risks related to state-owned enterprises and the implementation of large infrastructure projects, whose successful management is particularly important to maintaining Uzbekistan’s positive outlook.

Overall, the positive outlook for 2026 also extends to countries in Eastern Europe and the Caucasus. In several countries, including the Western Balkans and Moldova (B3, Stable), euro-integration remains the driving force for institutional reforms. Continued progress in the rule of law and anti-corruption efforts strengthens institutional positions even before EU accession, with Montenegro (Ba3, Stable) and Albania (Ba3, Stable) demonstrating high political commitment to reforms.

The agency highlights ongoing geopolitical risks. The military conflict in Ukraine is expected to continue in 2026, and some countries in the region face internal political tension: Georgia (Ba2, Negative) is at risk of institutional weakening, while Serbia (Ba2, Positive) experiences tensions between the government and large segments of the population. The conflict between Armenia and Azerbaijan continues to pose risks but does not undermine overall economic growth dynamics in both countries.

Moody’s stresses that negative scenarios, including heightened external threats from Russia or poor execution of reforms and infrastructure projects, could lead to a revision of outlooks. Nevertheless, economic diversification and integration, particularly in Central Asia, create a solid foundation for maintaining the region’s credit ratings in 2026.