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About the Research

Strategy and Research department of RB ASIA conducted research "COVID-19 ANALYSIS AND ITS IMPACT ON UZBEKISTAN ECONOMY", which covers the following topics:

  • What do we know about COVID-19 virus?

  • What do we not know about COVID-19 virus?

  • The current state of the Chinese economy

  • Possible scenarios and consequences for Global economy

  • How the virus can affect the economy of Uzbekistan?

Key highlights

Global economic growth can decrease by 1% compared to 2019 and expected to be around 2% with moderate spread of coronavirus.

The most significant factors are:

- China’s GDP decline from almost 6 percent growth to about 4.7 percent

- a one percent drop in GDP growth in East Asia

- a decrease of 0.5 percentage points for other large economies.

How the virus can affect the economy of Uzbekistan – moderate scenario


Export of tourism services in 2019 amounted to 1,313 million US dollars with the number of tourists of 6,748 thousand people. The bulk of tourists were from neighboring countries (86%) and Russia (7%). The countries most susceptible to coronavirus today account for 110 thousand people - China (54 thousand people), Korea (35 thousand people) and Italy (20 thousand people). At the same time, tourist flows from other countries will also decrease due to the introduction of restrictions on movement, and negative moods in general.

Under the scenario of rapid recovery, the volume of tourism services might not decrease significantly (10-15%). However, in harsher scenario, the volume may be reduced by 30-40%.


2. Value chain distortions

Many countries have already suffered from a disruptions in the value chain, as China is the largest manufacturer of many types of components, including electronics, automotive, machinery and various equipment for such industries.

As for Uzbekistan, in the structure of imports according to data for 2019 China is the largest partner (5.1 billion US dollars), Russia in the second place (4.1 billion US dollars) and in the third place Korea (2.6 billion US dollars). It is necessary to pay attention to the structure of imports - China and Korea are the main suppliers of machinery and equipment to Uzbekistan, supplying about 50% of all machinery and equipment.


3. Oil & Gas products

In 2019, oil and gas products accounted for 14% of the total export. The decline in energy demand coupled with the disruption of the OPEC+ transaction led to a collapse in energy prices. To date, oil is trading at $ 33 per barrel (WTI), while natural gas is below $ 2 per MMBtu. Despite the fact that the relationship between the price of oil and gas is not direct, the current global situation negatively affects both products and, accordingly, Uzbekistan export value.

4. Demand for gold

In a crisis situation, investors begin to sell risky assets such as stocks and invest in defensive assets. Defensive assets are US government bonds and gold.

This situation may have a beneficial effect, given the fact that Uzbekistan exported gold for $4.9 billion, or 27.5% of total exports. If in 2020 the current price range and export volume in tons is maintained, the export value can increase by more than 25%.

5.Capital Markets

The current volatility of the financial market may adversely affect the plans of the government and state-owned entities for the placement of shares and bonds. With negative market sentiment, uncertainty about the spread of the virus and the effect on the global economy, investors will be less willing to invest in developing countries and will keep assets in defensive assets. Even with the successful placement of financial instruments, the capitalization of companies may be underestimated, or the cost of bonds may be overestimated.


6. Investments

There are several factors that can negatively affect the amount of investment.

Firstly, due to restrictions on the entry of foreign citizens into Uzbekistan. These restrictions will affect the negotiation processes and the development of investment projects.

Secondly, those investment projects that are already at the implementation stage have begun to suffer, as foreign specialists, including from China, who must perform engineering and commissioning work, cannot enter Uzbekistan.

Thirdly, if the global economy goes in the direction of a global recession, then it will be more difficult to attract investors, since they will keep their accumulations in defensive assets till the global economic recovery begins.


7. Money transfers

According to the Central Bank of the Republic of Uzbekistan for 9 months 2019 remittances (personal transfers) to Uzbekistan amounted to 4.5 billion US dollars, of which 85% from Russia and 6% from Kazakhstan. Due to the sharp fall in oil and gas prices, since the beginning of 2020 the Russian ruble have depreciated by 20%, and the Kazakh tenge have depreciated by 14% against the US dollar.

If the current energy prices are maintained, we can expect that remittances to Uzbekistan will decrease by 15-20% in 2020.

8. Consumer behavior

Based on consumer behavior in China in the previous months and during the SARS virus in 2002-2003, the following changes in the structure of consumer purchases were identified:

  • Significant increase (80%) grocery purchases online.

  • Significant increase (more than 1.5 times) in purchases of medicines, as well as household hygiene items.

  • Slight increase in food purchases.

  • Fall of purchases of clothing, cigarettes, cosmetics, beverages, pastries and luxury goods.

These trends are also relevant for Uzbekistan.


9. Labor productivity

Due to the transition to remote work of white-collar workers, as well as the need to stay at home to care for children, who do not go to school and kindergartens, workload and its productivity will decrease. These effects will be most sensitive for the capital - the city of Tashkent.


10. Catering Facilities

Catering facilities such as cafes and restaurants will suffer from low attendance by locals and tourists, while online orders for home delivery will increase significantly.

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