0:00 [Music] [Applause] [Music] G is the viewers and welcome back to the review program in this episode we will talk about the economic shifts and figures of usbekistan throughout the 20123 inflation and the future economical aspects of the country [Music] as the global economic landscape continues to evolve usbekistan finds itself grappling with the complex issue of inflation 2023 the country's economic figures for the year paint a non picture
0:45 Mark by the series of challenges that have ended to rise in prices particularly during the winter season we have talked to the residents of tashkin in regards to that uh the changes of the prices and their expenditures per month summer I'm reti for retirees here in terms of food products there is a big shortage the pension is small in addition to food we also pay for an apartment utilities and this money is barely enough recently decree was signed to increase the pension did you feel the difference no everything is expensive everywhere food is very expensive made for example cost almost 100,000 SS that is why half of the money is already spent on buying food
1:30 I have recently arrived and noticed that prices in capital have risen very much for services especially for example the subway last year it was cheaper in Supermarket the prices for the most necessary food products have increased significantly in general I didn't feel the rise in food prices much I noticed a strong increase in gasoline prices because I drive a car because of this sometimes I have to take a taxi and at such times I have noticed how the prices for cap Services have risen prices always go up but wages don't go up accordingly prices rise gradually and many people do not notice this increase mostly the price increase is very noticeable for gasoline food prices are also notably Rising for example I
2:17 spend from 300 to 400,000 SS a [Music] week uzbekistan's economy grew by 5.8% over the past 9 month of this year exports increase by 23.5% and made of $17.7 billion due to the implementation of large scale industrial and infrastructure projects in economic sectors and regions 226.000 trillion sus of Investments were mastered up by 11.8% compared to the same period of last year by the end of the year GDP growth is expected to be [Music] 5.6% now what is the situation with uzbekistan's economy what are the drivers of the inflation in the country and what is the future of this industry
3:03 to answer all these questions we have invited a special guest from ADB the expert in economies uh to discuss all these aspects good evening Mr bigo thank you so much for dedicating your time for this interview we're really glad to have you in our studio today good evening thank you very much for hosting me m let's start off with the basics uh what is the current situation with the economy in usbekistan and could you particular reflect on the influ trends and what effect what are the main factors that affect the uh price rises in usbekistan so in terms of economic performance usbekistan is performing well relatively to other countries in the region so usbekistan for the first half of of this year achieved U more than 5.5% like close to 6% growth um and
3:49 also inflation although Still Remains high but the there's a deceleration of inflation I.E you know slowing down the price hikes uh for the year and we expect that you know till the end of this year the inflation will be around like 10% Max uh we're talking about end of uh period inflation and the growth uh rate in in economic expansion will be continuing so uh most probably it will be around five 5 and a half% for the year uh how do you Vision the upcoming winter season what will there be any specific areas in the economy that may affect most in uh winter uh we have U some seasonal price hikes for vegetable uh fruits and Etc uh so
4:36 that will reflect in the increase of prices for food uh essentially food itself uh plays uh an important role in the overall basket or consumer we call it consumer basket index of household consumption uh we expect that uh during the winter that the certain price hikes for the uh food price food stuff uh will remain uh till December till the end of December and also in terms of um services and also we call it non food products on Services uh such as Transportation uh education Etc um that will have some lacked impact uh from the increase of energy prices that the government usbekistan declared for the
5:22 Enterprises in the beginning of October and also some price differentiations for the households energy consump ion starting from November so this energy price hike will have so-called cost pushing inflation in the economy but that requires some some time to so so that you know we need to wait uh to see the reflection of this price hike uh in energy on other goods and services what are the main drivers of the inflation so in usban the main driver once again uh mentioning about this tariff policy uh so since bistan is uh pushing the structure reforms which is uh necessary to uh transition to market economy so
6:08 structur reforms in a simple language uh means um you know adjusting the prices for uh energy price uh also for public transportation Etc so that the production or delivering of those services and products to the population and firms they be will be at the level of for the Enterprises uh at the level of at least a cost recovery level that means whatever they invest and spend money and capital to produce these services and products or Commodities uh they should cover the cost of it uh this is essential because if we don't if the government does not pursue the price adjustments in energy sector that will
6:56 not be healthy in terms of financial sustainability or longer term survival of the state-own Enterprises or the whole industry itself besides usbekistan other countries they went through this process and uh this is usual uh if we compare to the other transition countries in CIS as well as in Asian countries and uh well hopefully uh if they will pursue further reforms and accelerate this uh price adjustments um well by 2026 or so we will have uh at least uh single digit inflation in the economy and how are the global economic shifts expected to influence the inflation inpakistan so we have uh back in 2022 we had so-called
7:42 exhaustion shocks right stemming from first of all some geopolitical conflict uh between countries um and that adversely impacted the uh supply of goods and services especially food commodities like grain uh uh and also like potatoes and Etc and this uh increased the prices worldwide and that was uh right after the start of the conflict and and it was also after the co pandemic the co co pandemic itself it was the first wave of exogenous shock that increased the transportation cost as well as the overall cost of the Commodities in the market in the world market and this cost
8:30 uh so-called imported cost we saw last year in 2022 in in uzbekistan's uh consumer basket uh index and uh starting from uh almost like March April or so of this year we see the trajectory in the World Market uh in terms of prices for Commodities uh downward so that means um that will the High inflation that usbekistan Imports for food stuff and other inputs for the production of Enterprises and also for the household consumption uh it will go uh it will accelerate the inflation that uh we have usbekistan has been uh importing so that
9:16 means uh most probably uh this trend will continue that's our expectation as well as other uh International financial institutions projection um so as long as GE geopolitical conflicts uh their impact uh adverse impact on the World prices will remain more or less stable in other words uh there will be less fluctuations and let let's Sparks in the conflicts uh in in certain regions what is the role of international organization in this process well International organizations first of all we have been pushing the structural reforms or advocating to ensure that the overall economy becomes sustainable uh because we know know that since usbekistan is going through the transition to market economy uh at the
10:03 same time usbekistan has large role of stown Enterprises in its economy and those stown Enterprises they major producers of energy uh we're talking about natural gas electricity Etc and also within the transportation industry itself the the state uh role is very important uh in that sense uh what we have been I basically all ifis and development Partners we have been advocating to to to authorities here in usbekistan is to speed up the structure reforms once again structur reforms means not only increasing prices or just to cover the cost of the production and supply of those commodity or services and goods uh but also uh transformation of those standown Enterprises
10:49 transformation means uh making their financial management and Reporting consistent with International standards and also to ensure that all those uh State on Enterprises they will have less dependence on Ministry of Finance today Ministry of economy and finance so that they will have less subsidy receiving from the state budget I.E from taxpayers money uh instead they will reform themselves inside and then they will try to have an access to International Capital markets so that they can sell their Securities their bonds and other uh Equity similar to to bonds other Securities so that they can raise capit cap for themselves and then expand their business and further uh lower the price
11:35 of of their commodi and services that they provide because of their higher productivity in their production actually talking about this Society if you don't mind I have a personal question uh like the residents of tashkin they say that it became really expensive for example they say the tourists come here and they say it's really cheap but in comparison to the local residents they say it's really expensive especially in the capital do you think this trend will continue there will be a certain point where the prices will just lower down yeah uh well the the prices in the capital city which is uh Urban which is expanding drastically we call this like rapid urbanization uh it is not only in Tashan uh if you go to Sumer or urant or bukara or Nai you see this rapid expansion of
12:21 constructions right for example the business uh like we call the cities right are you business centers or downtowns uh as well as residential uh houses uh this is uh the the typical uh Trend where uh a developing country is uh taken off in terms of growth and this growth here in usbekistan is based on the investments in capital INF Capital assets I.E infrastructure like roads houses and Etc and also expansion of industrial uh capacity of firms so for example uh there we have uh we know some firms they just import lot of equipment modern equipment so that they can invest in
13:08 their production line to expand and then enlarge the employment of of more employees and the overall uh you know uh uh objective is to to reach that level that they start exporting and uh Beyond domestic Market I USBC Market and for this this trend requires more employees coming from different provinces as well uh China went through this experience and uh you know other countries in in Asia uh usbekistan is entering or has entered already the stage of development which is which is okay uh so people uh certainly when you have more uh dense
13:53 densely populated urban areas that that's a uh that's a huge Market right for for the Enterprises and also that also triggers demand increase for for food for servicing Etc and then the prices of course you know they also push the prices up uh but on average if you go to get the average inflation or Price levels taken into account the prices in rural areas then it's of course in know much uh lower the prices are much lower than uh or cost of living much is uh is much you know lower than uh cost of living living uh in in rural areas so yes in capital city in Tashan the prices and inflation will uh seem to
14:39 people very high actually they are high uh however uh the one remedy for to to avoid this or at least to reduce this High inflation uh would be to increase the productivity of Labor I.E if as as an employee if I produce let's say say uh one unit of um some let's say book right I work for publishing a house and uh in terms of increasing my productivity right then let's say next year I start producing two books and that means I'm I'm becoming more productive the the problem here is if Enterprises and also this uh the government uh not government but public
15:25 policies to boost the capital human capital yeah or to develop the human capital including education skills development uh Innovation and research and development right if they don't invest in those areas of economy uh it will not uh lift the it will not improve the productivity of Labor so however if there's no productive labor although the wages are going up and up and uh that means what that means we have fewer fewer Commodities and goods and services in the market uh while we are potential to spend more money uh to buy those uh Commodities or IE our demand will also
16:11 go up that's a problem that leads to higher inflation and actually this leads also you know some uh we call it protracted or uh stuck uh high prices for for those goods and services so once again you know one remedy would be to focus on human capital development I.E overall productivity and also technology uh into the production uh what is adb's Overlook on the future of the uzbekistan's economy and the inflation well uh our our projection for the next year and actually for the medium-term uh projection uh we expect that the growth economic growth will be around 5.5% uh so well uh to the public if we say all those numbers it doesn't make uh
16:57 much difference and also it it would be uh a bit difficult for them to understand uh the impact of what we mean by 5.5% growth so basically the even though you know the growth would be over 5% it doesn't mean that this grow growth might be translated into more jobs that's a problem so our role is our as as right as Development Bank we try to come up with some projects we call it intervention into uh the growth trajectory of this country or development path of this country to ensure that those projects and also some reform advice or policy advice we provide to the government of usbekistan uh the growth generat some
17:44 employment first and also they generate uh change in income of households this is very essential and overall this this process we call it inclusive growth sustainable and inclusive growth and uh so our role once again is to to ensure that uzbekistan's growth is inclusive and sustainable thank you so much for this interview it was a pleasure to talk to you thank you thank you dear viewers for watching this program and see you in the next [Music] [Applause] episodes
