Fitch Ratings confirms Uzbekistan's rating at BB-, maintaining stable outlook

(MENAFN) On Friday, Fitch Ratings affirmed Uzbekistan's long-term foreign currency issuer default rating at BB- with a stable outlook. The agency highlighted several positive factors supporting the rating, including Uzbekistan's low public debt, substantial fiscal and external reserves, strong GDP growth, and ongoing reforms aimed at liberalizing the economy. Despite these strengths, the rating also reflects challenges such as low GDP per capita, weak governance, heavy reliance on commodity exports and dollarization, and a significant, uncompetitive state sector.

In the first half of this year, Uzbekistan's GDP grew by 6.4 percent, driven by increased investment and an 8.6 percent rise in real wages. Fitch projects that the country's full-year economic growth will be 6.2 percent, slightly down from last year's 6.3 percent, with expectations for a further moderation to 5.5 percent by 2026.

Inflation in Uzbekistan rose to 10.5 percent in July from 8.1 percent in April, primarily due to energy price increases. However, core inflation has decreased by 2.6 percentage points this year, and household inflation expectations have fallen from 13.6 percent at the end of 2023 to 12 percent, although this remains high. Fitch forecasts that inflation will average 9.5 percent in 2024, 8 percent in 2025, and 5.8 percent in 2026, which is above the Central Bank of Uzbekistan's inflation target of 5 percent.

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