March 5, 2019 / 10:02 AM / in 3 months

IMF sees Uzbek GDP growth picking up, urges curbs on credit expansion

TASHKENT, March 5 (Reuters) - Uzbekistan’s economic growth is expected to accelerate to 5.5 percent this year and 6.0 percent in 2020 from last year’s 5.0 percent on the back of strong investment, the International Monetary Fund said on Tuesday.

Uzbekistan has embarked on market reforms under President Shavkat Mirziyoyev, and heavy spending in areas such as construction and equipment imports should soon boost growth, IMF mission chief Albert Jaeger said.

“Why do we think GDP growth is going to pick up? The main answer is investment,” he told a briefing in Tashkent. “Imports of capital goods in 2018 increased to $7.5 billion, that’s $3 billion more than in the year before, in 2018. That is a massive increase.”

Inflation is set to remain relatively high, Jaeger said, around 15 percent, as price liberalisation continues.

Risks to the outlook include a drop in commodity prices and demand for Uzbek exports, as well as growth of credit, which reached 50 percent last year.

“It will be important that credit growth is contained going forward,” Jaeger said. “If it’s not contained, the risk is it will put pressure on inflation and push further the external deficit.”

Elevated credit growth could also overheat the economy and start a boom-bust cycle, Jaeger warned.

Commenting on Jaeger’s statement, Uzbek central bank Governor Mamarizo Nurmuratov told the same briefing that the bank and the government were discussing the idea of capping annual credit growth at 25 percent. (Reporting by Mukhammadsharif Mamatkulov, writing by Olzhas Auyezov, editing by Larry King)

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