EME Macro/Strategy: Uzbekistan – new dawn for the reform agenda

Our recent roadshow in Tashkent has reinforced our conviction that policymakers’ desires to reform the economy is genuine; however, after the relatively low-hanging fruit of the first few years, the reform process in the country has proceeded at alternating speeds. Even though the targets set by the president are being taken seriously, divisions in the administration on how to proceed, going forward, are starting to become more evident, and this increases the risks of a slower transition. Still, the growth outlook looks set to outperform its peers, and it remains on its way to becoming a middle-income country. However, we do not see a lot of room for mistakes ahead, as the labour market dynamics are a sword of Damocles. We believe the reshuffle and the upcoming post-election revisions of the executive are likely to be critical for understanding the potential reform pace in the coming years and, ultimately, shaping the medium-term macro outlook.