Uzbekistan: the path to the upper-middle-income group

According to the latest World Bank estimates, 52 countries currently fall into the upper-middle-income category. Over the last 25 years, the methodological parameters for measuring and setting thresholds of prosperity have undergone significant changes.
In this regard, it is appropriate to consider the population’s level of well-being based on the modern version of the World Bank’s methodology. Furthermore, it seems reasonable to identify the dynamics of key macroeconomic indicators that have contributed to the significant changes over the past two decades. Ultimately, this will help determine the trajectory for achieving the long-term economic policy goal of the Republic of Uzbekistan, which aims to transition the country into the category of upper-middle-income states, as outlined in the Uzbekistan-2030 Strategy.
Achievements of Uzbekistan Over Five Years
Under the leadership of President Shavkat Mirziyoyev, Uzbekistan is undergoing a significant transformation that has fundamentally reshaped its economic landscape.
The country has demonstrated openness and sustainable development across key macroeconomic indicators. These changes create new opportunities for growth, improvements in the business climate, strengthened international trade relations, expansion of innovations and investments in human capital.
Over the past five years (2019–2023), Uzbekistan’s economy has doubled (from $53 billion to $110 billion in 2024), and GDP per capita has almost doubled from $1.6 thousand to $3 thousand in 2024 (according to forecast estimates).
The World Bank revised its 2024 economic growth forecast for Uzbekistan upward to 6%. Moreover, the country is among the top three fastest-growing economies among developing nations.
The results of the analysis of key macroeconomic indicators demonstrate significant investments in economic infrastructure and the modernization of production capacities.
In 2024, the total volume of fixed capital investment is estimated to reach $120.1 billion, corresponding to an average of 24% of the GDP of the Republic of Uzbekistan. Alongside the growth in investments, the economy demonstrates improvements in employment and labor productivity.
In 2024, employment growth rates reached 5.6%, generating steady increases in population employment. Labor productivity grew by 25.1%, reflecting improved efficiency in workforce utilization, technological development, and the strengthening of the national economy’s competitiveness in the long term.
As a result, in 2024, Uzbekistan’s exports doubled, surpassing $25 billion for the first time. During the years of economic liberalization, the volume of foreign investments mastered increased sixfold, creating over 1.5 million high-paying jobs.
Results of the Analysis
The analysis of macroeconomic dynamics and institutional quality across 52 countries currently classified as upper-middle-income nations shows that three key factors played a crucial role in their transformation:
The presence of a rich potential in natural resources and the implementation of savings policies during favorable and advantageous conditions in global commodity markets. Due to rising prices for these resources, these countries were able to elevate their income levels to above-average levels.
A "favorable" geographical location, which provides an advantage for countries to serve as transit and re-export hubs. Simultaneously, these nations secured favorable conditions when concluding foreign trade agreements. For example, the agreements between Belarus and Russia regarding export prices for energy resources. Specifically, Belarus receives oil and gas from Russia at reduced tariffs.
Population Growth Combined with Institutional Development. A notable example is Malaysia, where economic growth has been driven by demographic expansion alongside the strengthening of institutional frameworks.
Comparing Uzbekistan’s macroeconomic indicators with the World Bank’s methodology for upper-middle-income classification reveals the following historical trajectory over the past two decades:
2001–2010:
This period reflected favorable global economic conditions for the development of the global economy, particularly in foreign trade.
This is evidenced by high commodity prices, particularly for energy resources, as well as the growth of export potential and the expansion of imports. During this period, countries had the opportunity to pursue policies of intensive savings and create “safety cushions.” These trends are characteristic of resource-rich countries. It was precisely during this period that most of the countries currently classified as upper-middle-income economies transitioned into this group.
2011–2023: During this period, the global economy was overcoming the negative consequences of the spread of the COVID-19 pandemic. At this stage, there was stagnation in foreign economic activity, disruption of the logistics chains for basic goods and energy resources, which subsequently caused prolonged inflationary pressures and a crisis in living standards.
Based on a comparison of Uzbekistan’s macroeconomic parameters with those of upper-middle-income countries, as outlined in the World Bank’s methodology, the following long-term policy guidelines can be identified, reflecting trends observed among upper-middle-income countries during 2000–2023:
 Minimization of the significant gap between inflation and GDP growth rates, which does not compensate for sustainable growth. From 2010 to 2023, the average inflation rate for countries that transitioned into and remained in the upper-middle-income category, considering their economic transformations, did not exceed 5.07% annually, while the annual GDP growth rate was more than 4.53%.
 Minimizing currency devaluation and preserving current trends are essential. The average real effective exchange rate for upper-middle-income countries over the past decade exceeded 14%, whereas Uzbekistan maintained this indicator at 8.5% in 2023. Moreover, the devaluation of Uzbekistan’s national currency has not exceeded 11% since the onset of post-liberalization reforms.
It is also important to note that, amid growing global economic uncertainty, when comparing macroeconomic and institutional indicators, Uzbekistan’s economy demonstrates significant positive progress compared to the development of upper-middle-income countries.
The dynamics of the Gross National Income (GNI) per capita based on the Atlas method developed by the World Bank show a substantial annual increase for Uzbekistan, rising from 7.27% to 11.86% since 2021. This trend makes the country’s long-term goal of transitioning into the category of upper-middle-income countries potentially achievable, provided that the gap between GDP growth rates and inflation is minimized. This includes further acceleration of GDP growth, a progressive reduction of inflationary pressure, maintaining the current stability of the national currency, and improving the quality of institutions.
Bobur Koraboyev, Darya Ugay, Dilnoza Raimova
Institute for Budget and Tax Research under Ministry of Economy and Finance of the Republic of Uzbekistan