Alona Lebedieva: IMF improves forecasts for Kazakhstan and Uzbekistan, but both economies are entering a slowdown phase
Alona Lebedieva
At the same time, for both countries these figures indicate a slowdown compared to 2025, when Kazakhstan’s GDP grew by 6.5% and Uzbekistan’s by 7.7%. Thus, despite improved forecasts, both economies are entering a more moderate phase of growth dynamics.
“Despite the higher projected growth rate, Uzbekistan’s economy remains almost twice as small as Kazakhstan’s in absolute terms. Uzbekistan’s nominal GDP in 2025 amounted to $137.48 billion compared to $300.05 billion in Kazakhstan. Therefore, Uzbekistan’s higher growth rates do not change the fundamental balance in economic scale between the two countries,” said Alona Lebedieva, owner of the Ukrainian diversified industrial and investment group Aurum Group.
Special attention should also be paid to inflation forecasts. For Uzbekistan, the IMF expects inflation at 6.8% this year and 5% in 2027. For Kazakhstan, the forecast is significantly higher—10.7% and 10.1%, respectively. As for the external trade balance, Uzbekistan’s deficit is projected at 1.3% of GDP this year and 3.4% next year. For Kazakhstan, a trade deficit of 1% of GDP is expected in 2026 and 2% in 2027.
“The external environment remains an important factor for both economies. Kazakhstan, as a major oil exporter, benefited from rising global prices driven by the US–Iran conflict. Uzbekistan, in turn, benefited from higher gold prices. However, for Kazakhstan, a potential downside risk could be the sharp decline in Qatar’s GDP growth in 2026—to minus 8.6%—since in 2025 Qatar was the main new investor in Kazakhstan, demonstrating nearly an eightfold increase in net investment, meaning the difference between capital inflows and outflows,” she noted.
The slowdown in Uzbekistan’s GDP growth in 2027 is associated with a reduction in remittance inflows from labor migrants, as well as more moderate growth in gold prices expected that year. Thus, as in Kazakhstan’s case, part of the risks for Uzbekistan also lies in external factors.
On April 16, the IMF mission, which had been working in Uzbekistan over the past two weeks, presented its recommendations. Among the negative trends identified were pressure on the budget due to demand stimulation, inefficiency of individual and sectoral tax incentives, and losses incurred by some state-owned enterprises.
“At the same time, demand stimulation is one of the factors supporting economic growth. However, the IMF traditionally adheres to the principle of a balanced budget and therefore focuses on the risks associated with such an approach,” Lebedieva emphasized.
The IMF recommends that Uzbekistan maintain a tight monetary policy to curb inflation and limit the growth of public spending in order to avoid additional inflationary pressure. Other priorities include accelerating the privatization of state-owned banks, increasing excise taxes on alcohol, fossil fuels, and vehicles, reducing investment incentives, and introducing a progressive personal income tax scale.
At the same time, according to available information, the Uzbek authorities do not agree with a number of the IMF’s remarks and recommendations. In particular, this concerns the abolition of investment incentives and the introduction of a progressive income tax. The logic of the Uzbek side is that the number of taxpayers is increasing, which means the labor market is gradually being de-shadowed, while investments remain critically important for accelerating economic growth in a country undergoing market transformation and a gradual transition to a more open economic model.
Among the issues highlighted by the IMF mission were also tariffs and non-tariff barriers to imports. However, representatives of the Uzbek authorities believe that these restrictions will automatically be reduced or eliminated following the country’s expected accession to the WTO in the near future.
“Thus, the IMF’s new assessments reflect two simultaneous trends. On the one hand, Kazakhstan and Uzbekistan continue to demonstrate relatively high economic growth rates, and their forecasts have been revised upward. On the other hand, both economies are likely entering a phase of slowdown compared to last year, and their future dynamics will largely depend both on the external environment and on their ability to balance growth stimulation with macro-financial stability,” Lebedieva concluded.
Alona Lebedieva
Aurum Group
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