On May 23, 2025, S&P Global Ratings revised its outlook on Uzbekistan to positive from stable. At the same time, we affirmed our 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings.

The transfer and convertibility assessment on Uzbekistan remains 'BB-'.

Outlook

The positive outlook indicates that S&P Global Ratings expects the government will continue to implement economic and governance reforms, while progressing with fiscal consolidation measures. The upside scenario also reflects our expectation of elevated gold prices, which will buttress Uzbekistan's export and fiscal receipts.

S&P Global Ratings could raise the ratings if Uzbekistan's reform commitment were to persist, demonstrated for example, by continued energy tariff reforms and improving supervision of government-related entities (GREs). We could also consider an upgrade if Uzbekistan moderates its budgetary and current account deficits without significantly impairing economic performance.

Th agency could revise the outlook to stable if external and fiscal deficits weaken beyond our expectations due to less favorable terms of trade, persistently high government spending, or higher borrowing costs. We could also revise the outlook to stable if growth slows significantly, for instance due to lower-than-anticipated benefits from debt-financed investment projects.

The outlook revision to positive reflects continued efforts to liberalize and improve the resilience of Uzbekistan's economy (a process that began in 2017), as well as enhance governance and macroeconomic management. S&P Global Ratings anticipated that ongoing economic reforms, government investments, and remittance inflows will support the country's strong growth outlook, with real GDP expanding by 5.6% on average over 2025-2028.

To address issues related to energy security, the high fiscal cost of subsidies, and rising gas imports, the government started raising electricity and gas tariffs in October 2023. Authorities plan for energy pricing to reflect costs by 2027. Lower subsidies, favorable gold prices, and high nominal GDP growth should help Uzbekistan reduce its fiscal deficit to 3.0% of GDP, on average, over 2025-2028, from 4.9% in 2023 and 3.3% in 2024.

Government development plans require sizable debt-financed investments. S&P Global Ratings anticipates that these will continue to drive up Uzbekistan's net general government and external leverage, but we expect that the speed of the increase will ease. The current account deficit moderated to 5.0% of GDP in 2024, and we forecast that deficits will slightly widen to 5.7% of GDP, on average, over 2025-2028, assuming declining gold prices and elevated import growth to support public investment projects.

S&P Global Ratings’ ratings on Uzbekistan are supported by the economy's still-moderate level of net general government debt. S&P Global Ratings forecast that this will reach 34% of GDP by the end of 2028. The sovereign's fiscal and external stock positions have historically benefited from its policy of transferring some revenue from commodity sales to the Uzbekistan Fund for Reconstruction and Development (UFRD; a sovereign wealth fund).

S&P Global Ratings’ ratings are constrained by Uzbekistan's low economic wealth, measured by GDP per capita, high exposure to commodity price volatility, and relatively limited monetary policy flexibility. In the agency’s view, despite reforms, policy responses are difficult to predict, given the highly centralized decision-making process, developing accountability mechanisms, and the limited checks and balances between institutions.

Forecasts

• Economic growth will average 5.6% over 2025-2028, after reaching 6.5% in 2024.
• Economic and governance reforms, including planned hikes to energy tariffs, will support the country's investment prospects.
• Decision-making will remain centralized, and despite some improvements, perception of corruption is likely to be high.

Uzbekistan's economy expanded by 6.5% in 2024, boosted by strong performance across a broad range of sectors, including information and communications, construction, and trade. From 2021-2023, the country's real GDP growth was high at about 6.8% a year, on average. We predict that growth prospects will remain strong. Uzbekistan's growth is heavily investment-led; it has one of the highest investment-to-GDP ratios globally, at about 33% in 2024. Under the Uzbekistan 2030 strategy, the government and public entities are directing investments toward the energy, transport, telecommunications, agriculture, and tourism sectors.

The government has also started raising electricity and gas tariffs. It plans to diversify and modernize the generation of electricity, particularly green energy. This will mainly be achieved through public-private partnerships (PPPs)--for instance, Saudi Arabia's ACWA Power plans to invest in electricity generation projects worth $7.5 billion (7% GDP) through 2030. Currently, about 20% of the energy consumed in Uzbekistan comes from green sources; it aims to increase this to 40% by 2030. The government also aims to expand production of copper, gold, silver, and uranium to boost the export base.

Despite the increasing energy tariffs and elevated interest rates, we anticipate an increase in consumption. This will be sustained by remittance inflows and rising wages, combined with government measures to stimulate the economy, such as tax exemptions and regulated prices on certain consumer goods. Government efforts to strengthen the regulatory framework, privatize certain state-owned companies, and gain accession to the World Trade Organization (expected to take place in 2026) could also support private and foreign investment.