Uzbekistan's Economy Grows 8.7% in First Quarter

Tashkent, Uzbekistan (UzDaily.com) — President Shavkat Mirziyoyev on Friday chaired a video conference dedicated to a critical review of first-quarter economic performance across sectors and regions, and to outlining priorities for the remainder of the year.

Gross domestic product expanded 8.7% in the first quarter, industrial output grew 8%, the services sector surged 16.1%, and agricultural production rose 5.1%. Export volume reached $5.8 billion, while foreign investment totaled $13.7 billion. The annual inflation rate fell to 7.1% for the first time.

As a result, budget revenues in January through March climbed 35% year-on-year to 103 trillion soums. Local budgets accumulated an additional 2.2 trillion soums, of which 1.4 trillion soums remained at the disposal of districts and cities.

"Next month, we will place 30% of state assets worth $2.4 billion on international capital markets for the first time. This has been made possible by establishing the National Investment Fund and transferring management of 13 strategic enterprises to the reputable firm Franklin Templeton. Remember this: to take our economy to a new international level, we have thought everything through deeply and made our final decision," the president said.

A report published by the International Monetary Fund last week noted that Uzbekistan is maintaining strong and stable economic growth, underpinned by high economic activity. The president also highlighted that this year the country climbed 14 places in the Index of Economic Freedom and entered the group of "moderately free" economies for the first time.

"Those who understand these things know what a difficult and demanding path we have traveled to achieve this. Overall, the results achieved since the start of the year reflect the effort invested. However, there are those who receive a salary without working and ride the same train as those who genuinely labor. The demands of the time, the economy, and the people grow with each passing day. A third of the year has already passed. Unfortunately, some have still not woken up," the president said.

He warned against complacency, stressing that those who assume strong first-quarter figures guarantee a successful year are mistaken.

"I repeat: in the current conditions, as global tensions, conflicts, and the struggle for leadership intensify, the world will no longer be as calm as before. In such circumstances, every leader must fully transform their habitual working style, their approach, and if necessary, their entire worldview," Mirziyoyev said.

This year, 140 trillion soums is being channeled through banks to support small and medium-sized businesses. The president cited stark regional disparities in lending efficiency: each one billion soums in small business loans created 20 permanent jobs in Shirin and 17 in Uchkuduk, while in districts such as Uchkuprik, Piskent, Bostanlyk, Karmanin, and Kurganteppa, the same amount yielded on average only three jobs.

Had all district banks directed credit toward the most effective projects, 36,000 additional jobs would have been created and the incomes of 60,000 informally employed workers would have been brought out of the shadow economy, the president said. He called for the mandatory use of artificial intelligence in project selection and credit allocation, criticizing the slow pace of training regional bankers in AI applications. Officials were instructed to launch an AI-powered advisory platform in banks to analyze project parameters, risks, and market demand, delivering ready-made lending solutions to entrepreneurs.

The president devoted particular attention to energy efficiency. He criticized 44 district electricity grid companies where energy losses exceed 20%, and called for the immediate dismissal of managers who have drawn no lessons, their replacement with younger personnel, and the setting of key performance indicators requiring losses to be halved. More than 10,000 third- and fourth-year students are currently enrolled in energy programs at technical universities. The president urged their practical field training through a dual education model and proposed directing savings from efficiency gains as bonuses to both faculty and students.

Regional governors and industry heads were tasked with saving five billion kilowatt-hours of electricity and 3.5 billion cubic meters of gas during the current year.

The president sharply criticized officials who, rather than solving problems for entrepreneurs, evade responsibility and scramble to cover their failings once matters reach the national level. He singled out the governor of Nurafshon, who instead of assisting a businessman blocked by bureaucratic obstacles for two years was reportedly focused on finding out how the matter reached the president. The governors of Guzar, Narpay, Urgench, Yangiuyl, and Chinaz districts were identified as having failed to launch projects despite receiving allocated funds, including an additional 262 billion soums from the national budget for business infrastructure improvements. Their regional supervisors were instructed to assess the same day whether those district governors were fit to remain in their posts.

Approximately three million foreign tourists visited Uzbekistan in the first quarter, generating $1.103 billion in tourism export revenues. The president attributed the strong performance in part to what he called "tourist relocation," with millions of travelers seeking safe and reliable destinations amid global uncertainty. He instructed officials and governors to compete actively for every visitor and to prepare comprehensive plans to boost the tourist appeal of each district.

Turning to industry and exports, the president criticized 13 districts — including areas within Kashkadarya, Jizzakh, Navoiy, Namangan, Surkhandarya, Fergana, Khorezm, and Tashkent — for failing to meet their industrial output targets, and ordered disciplinary action against their governors proportionate to the degree of underperformance.

Despite an increase in domestic copper supply, monthly processing remains below 6,000 tonnes. Consequently, first-quarter growth in the electrical engineering industry came in at 7.8% against a projected 11.2%, while the export plan was fulfilled at only 57%. A $100 million allocation and the option of interest-free, unsecured working capital loans had been made available to develop electrical engineering exports, yet no bank had made use of those terms — a failure the president characterized as unacceptable. Officials were ordered to visit each underperforming enterprise personally and resolve financing issues on the spot.

The president called for the broader adoption of productivity enhancement methods such as kaizen and lean production, noting that while around 50 domestic entrepreneurs had begun implementing these approaches after studying them abroad, industry associations in textiles, construction, electrical engineering, and furniture had not promoted their mass adoption. The Ministry of Economy and Finance was tasked with implementing advanced efficiency programs at 100 enterprises this year and mobilizing $30 million in grant funding for the purpose.

On the shadow economy, the president reported that in the first quarter the share of unobserved economic activity exceeded 40% in the Jizzakh, Kashkadarya, Namangan, Samarkand, Surkhandarya, and Khorezm regions, and surpassed 30% in Andijan, Fergana, and Bukhara. In Bukhara alone, more than 900 enterprises that had ostensibly ceased operations in the previous year consumed 1.3 million kilowatt-hours of electricity and 480,000 cubic meters of gas in January and February, while informal freight transport on 12,500 vehicles resulted in 40 billion soums in lost tax revenue. Undervaluation of residential property in the same period concealed 1.8 trillion soums in monetary transactions.

The president announced the launch of a post-commissioning investment project monitoring platform integrated with tax, customs, employment, cadastre, and utility databases, enabling analysis of enterprise activity across 39 indicators. Of 688 enterprises commissioned over the past three years, 210 are operating below capacity, resulting in 33 trillion soums in unrealized output and 23,000 idle jobs. Officials were instructed to develop road maps for each of the 210 enterprises, with specific deadlines and responsible officers, and warned that failure to stabilize these enterprises by the end of the first half-year would result in a review of their positions.

The overall target for attracting foreign investment this year is set at $53 billion. The president called for an AI-powered platform to analyze existing capacities alongside domestic and external demand, providing recommendations on where and what projects to implement, accessible to investors and consulting firms through a single-window interface.

Regarding enterprises with foreign participation, the president noted that of more than 18,000 such companies operating in the country, 526 manufacturing firms have never exported, while a further 767 engage exclusively in importing and reselling goods domestically. He called for a dedicated program to encourage these companies to organize local production, cooperate with domestic entrepreneurs on components and spare parts, and prepare to enter export markets.

Concluding the meeting, the president said all leaders must now assess risks under two to three scenarios and maintain contingency plans alongside their core targets. Regional governors were instructed to form think tanks involving university professors and young entrepreneurs within three days, and to communicate to the public within one week what concrete changes they plan to implement this year.

"However hard we work to grow the economy, if inflation grows alongside it, the population and entrepreneurs will not feel any improvement in their lives. Because rising prices for goods, works, and services erode the value of increased incomes," Mirziyoyev said.

Global oil prices have risen 40% since the start of the year, and ongoing conflicts have forced changes to established logistics corridors, pushing up transport costs by 25–30%. Imported inflation is adding up to one percentage point of additional pressure on domestic prices. Nevertheless, the president said it was impermissible to use external factors as cover for allowing anti-inflation efforts to drift, stressing that 70% of the goods and services in the consumer basket affecting inflation are domestically produced.

To hold inflation at 6.5% for the year, officials were instructed to increase the supply of domestic goods and reduce their cost. First-quarter imports of cattle fell by half due to logistics disruptions, prompting the introduction of subsidies of up to four million soums per breeding animal airlifted into the country and coverage of half of transport costs for meat imports. The second-quarter target was set at 45,000 tonnes of imported meat, rising to 130,000 tonnes for the full year.

The session also addressed progress on the Smart District platform following the president's visit the previous day to the situational analytics center in the Mirzo-Ulugbek district of Tashkent. All regional governors toured the facility on Friday. A seminar for regional law enforcement, security, and tax officials on replicating the Mirzo-Ulugbek experience was ordered within one week, and governors were tasked with launching equivalent analytics centers in regional capitals and major cities within two months.