Uzbekistan Emerges as One of Europe and Central Asia’s Fastest-Growing Economies
By Stephen M. Bland
Uzbekistan is on track to be one of the five fastest-growing economies in the broader Europe and Central Asia region next year, according to the World Bank’s Europe and Central Asia Economic Update, Fall 2025. The report projects Uzbekistan’s gross domestic product will expand by about 6.2% in 2025 – well above the regional average amid an overall slowdown across emerging European and Central Asian markets. Overall regional GDP growth is expected to ease to roughly 2.4% in 2025, down from 3.7% in 2024, as weaker output in Russia drags on the aggregate.
Central Asia as a whole continues to stand out. The World Bank notes that countries in the region are collectively growing around 5.9% – making it the fastest-growing part of Europe and Central Asia for the third straight year. Within that group, Tajikistan is also forecast to grow by 7%, Kyrgyzstan by 6.8%, and Kazakhstan by 5.5%. That performance keeps much of Central Asia well ahead of Europe’s advanced economies, which are expected to grow by just over 1% on average. Turkmenistan is excluded from the World Bank’s regional calculations because it does not publish internationally comparable economic data.
For Uzbekistan, in particular, inclusion among the region’s top performers marks a sharp turnaround for a country that, less than a decade ago, was largely closed to global markets. By way of comparison, according to the World Bank, Uzbekistan’s economy is about eight times larger than Kyrgyzstan’s and roughly seven times larger than Tajikistan’s. In 2024, Uzbekistan’s gross domestic product was roughly $105 billion, compared with approximately $14 billion for Kyrgyzstan and $15 billion for Tajikistan.
Remittances and Investment Fuel Expansion
Rising income from abroad and expanding investment at home due to an increasingly investor-friendly climate are the twin engines of Uzbekistan’s boom. The World Bank attributes its upgraded forecast partly to stronger-than-expected remittances and higher capital spending. In the first half of 2025, remittances sent home by Uzbek workers – mainly from Russia, Turkey, and South Korea – jumped 27% year-on-year to reach around $8.2 billion, providing a surge in household consumption. At the same time, both public and private investment are climbing.
Government spending on infrastructure and industrial projects remains high, and foreign capital is flowing in at record levels. According to Uzbekistan’s Ministry of Investment, Industry and Trade, foreign direct investment reached about $10 billion in 2024, the highest on record. Projects span energy, agriculture, and information technology, with investors from South Korea, China, the Gulf states, and Europe among the most active. The International Monetary Fund’s 2024 Article IV Consultation observed that “robust investment and resilient consumption” have kept growth well above the overall regional average.
Reforms Since 2016 Have Laid the Groundwork
This acceleration did not happen by chance. Since President Shavkat Mirziyoyev came to power in 2016, Uzbekistan has pursued a series of market-oriented reforms to dismantle decades of economic isolation and stagnation. The government unified the exchange rate, lifted currency restrictions, and simplified customs and tax rules. It began privatizing state enterprises, liberalizing trade, and reducing barriers to foreign business.
A decade ago, exchanging even a few hundred dollars meant walking away with stacks of Uzbek som, and often doing so on the black market. Before Mirziyoyev’s presidency, strict currency controls kept the official exchange rate far below the market rate, so many visitors and locals turned to street exchangers to get a realistic rate. The largest note at the time was 5,000 som, worth less than $2 even at the market rate. That changed after the 2017 currency reform, when the government lifted restrictions, unified the official and black-market rates, and stabilized the currency at around 8,100 som to the dollar. Higher-denomination notes soon followed, and digital payments through HUMO, Uzcard, Visa, and MasterCard have become common in major cities, underscoring how far Uzbekistan’s financial system has come.
The IMF credits these reforms with setting in motion a “virtuous cycle of higher investment, growth, and poverty reduction.” Annual GDP growth has averaged between 5 and 6% since the reform drive began, and the national poverty rate has fallen to 8.9%, with Mirziyoyev stating that, “By the end of this year, we aim to reduce it further to 6%”.
Uzbekistan is now in the final stages of its World Trade Organization (WTO) accession process, with a goal of joining by 2026, a move that could further open its economy and deepen global ties. Once relatively closed, the country now presents one of the most open investment regimes in Central Asia, underscoring how policy changes over less than a decade have transformed the business climate.
Structural Hurdles Remain
Sustaining such rapid growth will not be easy, however. State-owned enterprises continue to dominate banking, energy, and transport, and limit competition. The IMF has warned that the “state’s extensive role in the economy hinders the development of a vibrant private sector.” Continued expansion will require further privatization and regulatory reform.
External headwinds also loom. Slower growth in Russia – a major trade partner and source of remittances – could weigh on Uzbekistan’s outlook. Global inflation or disruptions to energy markets could also tighten fiscal space. The World Bank stresses that to preserve momentum, Tashkent must keep pushing on structural reforms: modernizing utilities, improving education, expanding broadband access, and ensuring transparent public investment. These efforts will determine whether the current boom can evolve into long-term, sustainable prosperity.
A New Role, Both Regionally and Beyond
Uzbekistan’s growth carries weight beyond its borders. As the most populous nation in Central Asia, with approximately 37 million people, its success also supports regional stability and development. A dynamic Uzbek economy strengthens trade routes that link China, South Asia, and Europe through the Middle Corridor, an increasingly important strategic alternative to routes passing through Russia, where Uzbekistan is working to become a central hub connecting East and West.
Western, Middle Eastern, and Asian investors are paying attention. Saudi Arabia’s energy giant ACWA Power has committed around $13.7 billion to renewable and gas projects in Uzbekistan, making it the company’s largest market outside the Kingdom. In banking, Hungary’s OTP Group became the first foreign bank to purchase an Uzbek lender, marking a milestone for the country’s financial sector. The European Bank for Reconstruction and Development now lists Uzbekistan among its top five investment destinations, with over €2 billion committed across 90 projects.
For Western governments and investors, Uzbekistan’s rise broadens access to energy and mineral resources at a time of global volatility, offering reserves of natural gas, uranium, and other materials vital for clean-energy technologies. It also opens a growing consumer market and potential manufacturing base in a region that bridges Europe and Asia. Just as importantly, Uzbekistan’s steady growth provides a measure of political and economic stability along the corridor stretching from the Caspian Sea to western China.
The United States and the European Union have both stepped up their engagement. Washington’s C5+1 platform links the five Central Asian states with the U.S. on trade and energy cooperation. The EU, meanwhile, launched its Global Gateway initiative in the region to finance sustainable infrastructure, with Brussels and Tashkent signing an Enhanced Partnership and Cooperation Agreement in 2022 to strengthen trade and governance ties. In October 2025, the EU introduced the Team Europe Initiative on Digital Connectivity in Central Asia to expand satellite-based internet access and close the region’s digital divide through new investments in infrastructure, technology, and skills. Together, these measures signal a broader Western recognition that Central Asia is gaining in strategic importance.
Outlook
Uzbekistan is entering a new phase of development, with growth no longer driven solely by commodity exports but increasingly by manufacturing, services, and information technology. The World Bank’s 2025 update notes that structural shifts “toward higher-value sectors” are already visible. Uzbekistan’s trajectory over the next few years will matter not only to its citizens but also to investors and policymakers beyond its borders. A stable, reform-minded, and growing Uzbekistan could help shape a more connected, diversified, and resilient Eurasian economy.