President Mirizoyev recently declared that the latest program of reforms has been completed. That focused on reforming the system of government, the state bureaucracy and improving both economic and physical infrastructure. He said that the country is now entering “an entirely new phase of development” and that his most important objective over the next ten years, i.e. to the end of his presidential term in 2036, is to further raise living standards and incomes across the economy. He has set a target for GDP of $300bn for “early in the next decade”, from just over $150bn last year, and that would bring GDP per capita to over $7,000 and rank the country in the upper-middle-income category.

Amongst the targets for this next phase of reform is to achieve greater economic and industrial diversification and to boost inward investment beyond the reliance on concessional loans from international agencies. The president also wants to extend structural reforms and efficiency improvements to the state industrial sector, including the largely inefficient and heavily indebted State-Owned Enterprises (SOEs), and to finally start the long-talked about privatization process.

Earlier this month the country did take the first privatization step with the listing (on the London and Tashkent Stock Exchanges) or shares in the National Investment Fund worth between $602.6mn and $691mn, depending on the take-up of the over-allotment option. That was a significant milestone, but the real test will be when the first listing of equity in a state industrial corporation takes place.

The banking sector, a candidate for privatization for the past several years, continues to drag its heels with no banks slated for a sale at least in 2026. The largest state corporation, and the fourth largest gold producer in the world, Navoi Mining, was expected to lead the corporate listings this year but that has been shelved for reasons not yet disclosed. It seems that state companies, or state company management, are far from ready for privatization.

Attracting more diverse inward investment will be less easy – it will require progress in tackling issues cited by multinationals and investors as obstacles to making or expanding investment. The “snag list” includes an often lack of transparency in business regulations and decision making. Frustration with the difficulties faced when dealing with many parts of the government bureaucracy and decision makers is also a frequently heard complaint.

But progress has been made and the situation facing multinationals is better than it used to be. Reforms and economic advances have made clear where are the major opportunities in the country, as well as making a lot clear what the challenges are.

List of major opportunities (alphabetical)

• Agriculture and Food. This is one area where the government believes the country can expand output to both reduce imports and to add to export diversification. There is a plan to try to attract more investment into food processing (for export) and to greatly expand greenhouse production of fruits and vegetables year-round. Complying with WTO rules is both a challenge and a driver, while the question of sufficient water supply and its efficient use is a critical risk.
• Critical Minerals. Uzbekistan hosts a large number of potentially commercial critical minerals (CRAMS) and uranium. Both the US and the EU are actively engaged in talks with the government to secure participation in development projects, although China is already well established in the sector. Tashkent is likely to follow Kazakhstan’s lead and require investors not only to extract minerals but to at least semi-process the output to create jobs and higher value exports.
• Expanding Society. The country’s population is expanding, and the key Presidential priority is to move the country into the upper-middle-class income category. Progress is steady, albeit still too dependent on concessional debt and remittances. However, even with that steady progress, all areas of consumer activity (retail, services, leisure) are set to continue to expand. Also continuing to expand is government spending in social areas, such as healthcare, education, housing, etc.
• Financial Markets. The financial system, including savings infrastructure, fintech, and capital markets are all relatively underdeveloped. As wealth expands in the populous country, and as Tashkent positions itself as one of the two main regional financial centers (with Astana).
• Green Energy. Uzbekistan is a participant in the Green Energy project (to supply green energy to the EU via Azerbaijan) and has also set a plan to both expand a stable domestic energy supply, which it does not have enough of, and to increase exports. Projects will continue in the sector covering solar, wind, hydropower and several nuclear plants.
• Production Hub. The President’s vision is that the country will become much less reliant on remittances but will develop a range of production and processing industries so that Uzbekistan becomes a low-cost manufacturing country from which multi-nationals will export via the expanding rail networks. This covers such sectors as automotive (vehicles and parts), equipment, textiles, chemicals, etc. Several such projects are in the planning stages or are starting to expand. Sufficient energy, labour force, transport networks, and clarity of the business environment are amongst the main concerns.
• Transport and Logistics. The expanding rail networks are critical for Uzbekistan to expand trade partnerships and to grow exports. The main route now under construction is that from China via the Kyrgyz Republic, which can then either access Iranian ports or Pakistan via Afghanistan or connect with the Middle Corridor, the I.N.S.T.C (India to Russia), or a new route across the Caspian to access the proposed TRIPP to Istanbul’s Mediterranean ports.

Investors and the government face several important challenges

• Budget Reforms. The IMF and other international agencies continue to push the government to reduce social subsidies, e.g., in utilities, and to boost/diversify tax revenues. This is challenging for all governments in Central Asia in terms of social stability and inflation management.
• Energy supply. The country needs a greater supply of electricity to provide a stable load supply today and to cover planned industrial expansion and exports planned for the Green Energy Corridor.  
• External Account Deficit. One of the reasons why the country’s external account deficits, i.e., the trade deficit (-$13.5bn) and the current account deficit (-3.9% of GDP), were not larger last year is because of the big contribution made by gold to exports (almost 40% of total exports). The weaker gold price is already evident in 2026, with the trade deficit for 1Q26 widening from $1.1bn in 1Q25 to $6.4bn. Exports have yet to grow (as targeted by the President) or diversify to reduce the deficit (a medium-term target).
• Debt Management. A key driver of growth over the past ten years has been the high flow of concessional lending. In 2016 public debt was circa $9bn, rising to $24bn in 2021 and to $46bn currently. The government argues that this is driving growth with e.g. public debt to GDP falling from 38% in 2021 to 30% currently. The issue is, however, that as the country moves forward to upper income status, concessional lending will cease and the cost of debt service in the budget will rise steeply, all within the next 4 years.
• Remittance Dependency. Remittances (75% from Russia) accounted for 12.5% of GDP last year, was a major part of FX supply and represented between 15% and 20% of household incomes (varied by region). It means the economy, and the consumer sectors in particular, are vulnerable to external factors such as the Russian currency.
• State Sector and SOEs. Reform of this sector and the privatization of assets in the state’s portfolio, is recognized as the next major, even critical, part of the reform agenda.
• Water and Environment. The whole region is struggling with water shortages and the threat of further declines, especially if the Afghan canal opens and sucks a lot more water from the Amu Darya River, and from Uzbekistan’s agriculture region.

Uzbekistan’s progress since the leadership change in late 2016 is very impressive. The value of GDP has more than doubled, from just under $70bn in 2017 to just over $150bn last year. A lot of that was achieved on the back of major economic reforms and the circa $150bn of foreign investment in Uzbekistan. Most of that has come because of the direct involvement of President Mirizoyev in attracting IFI concessional lending and grants for major infrastructure projects in such sectors as energy, transport, and natural resource development.

The recent listing of the National Investment Fund, and the country’s debut at the FIFA World Cup in North America this summer, means that interest in reform progress will no longer be confined to niche investors in frontier markets.  The country is now in the big league and will face greater scrutiny. The government is under greater pressure to deliver. Football fans will be happy with a  “good showing” in the debut World Cup – investors will want high scoring wins.