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Uzbekistan: Economic Hardships Belie Official Growth Figures

  • Gulnoza Saidazimova --> A market stall in Andijon, eastern Uzbekistan. Many Uzbeks are struggling to afford basic food staples (AFP) November 1, 2007 (RFE/RL) -- Although officials in Uzbekistan say the country's economy grew by 9.8 percent in the first nine months of this year, ordinary Uzbeks don't seem to be feeling the benefits of a growing economy. 

Moreover, with the media and official statistics firmly in the hands of an autocratic president in an election year, observers caution against placing too much faith in claims of economic achievement.

The official statistics for Uzbekistan's gross domestic product regularly differ by several percentage points from those reported by international financial institutions. Depending on whom you ask, the discrepancies are blamed on anything from different accounting methodology to the government's political agenda. By exaggerating economic growth, the regime of President Islam Karimov could be well-positioned to tout its successes while avoiding genuine reform.

Ann-Louise Hagger, an editor and economist with the London-based Economist Intelligence Unit (EIU), tells RFE/RL that growth for the first nine months of this year is actually likely to be lower than the nearly double-digit growth already announced, although she notes that the economy has indeed been expanding.

Hagger points out that recent growth is a trend throughout the CIS region. "A lot of economies picked up quite strongly in the last few years. Obviously, there was quite a sharp fall in output in the post-Soviet period. In a way, the economies are bouncing back from that," she said. She adds that Uzbekistan and other energy-rich states have seen growth largely because of their huge exports of increasingly lucrative hydrocarbon resources.

The Russian state gas monopoly Gazprom, Uzbekistan's biggest partner, has injected millions of dollars into the country's energy sector in the last few years.

In addition to high demand for oil and gas, prices for Uzbekistan's other major export items -- cotton and gold ---- have also been on the rise. Uzbekistan is among the world's top 10 gold exporters, although officials do not announce gold output statistics.

A Questionable Bumper Crop

In October, Uzbek authorities reported that the country exceeded its goal of 3.6 million tons for the cotton harvest. President Karimov on October 16 congratulated the Uzbek people on "a great victory" and said the harvest was the result of "selfless work" and "wide-ranging reforms being carried out in the country's agrarian sector."

Karimov claimed that the "bumper crop, for the first time in Uzbekistan's history, was 100 percent produced by private farms, which is an absolutely new type of ownership in the village."

But Uzbek farmers have complained of being forced to sell cotton to the government at a fixed price -- much less than a free market could offer. The practice has led to smuggling of cotton out of the country, mainly to Kazakhstan.

Hagger says is unclear how reliable the government's output statistics are. "We know there is no market structure in place in the cotton sector, which [would] encourage farmers to increase output. They have to sell their output at artificially low prices. There are no market incentives there. And there is also environmental degradation, problems like that, which suggests that cotton output might not be as high as suggested by the authorities," she said.

Tashkent-based journalist Abduramon Tashanov also questions the published figures, noting that the achievement of this year's cotton-harvest goals was reported earlier than in previous years. He suspects it might be official propaganda ahead of December's presidential election, which is expected to hand incumbent Karimov a third term.

"A very weird thing happened this year. The earliest date in the country's history that [officials] have announced that the cotton-harvest plan was achieved was in 2000 -- on October21. Suddenly this year it was achieved on October 10. If the current regime stays, we are going to hear similar reports by Independence Day" on September 1, he said. "Summer, spring, or autumn, they arrive at the same time every year -- they don't arrive earlier to help cotton farmers. But the statistics are turning into brazen lies."

Tashanov alleges that some journalists have received instructions from supervisory institutions to report such economic "achievements," including those in the cotton industry.

A Struggle To Make Ends Meet

For ordinary Uzbeks, a growing economy holds little meaning. They are more concerned about low wages and high prices at the bazaars.

The International Monetary Fund put the inflation rate at more than 15 percent in 2006, the latest available figure, while the official minimum monthly salary languishes at just $12.

A woman from the southern Uzbek town of Qarshi told RFE/RL that she was concerned about the high price of flour -- which has risen dramatically since September. "A 50-kilogram sack of flour costs 45,000 sums [around $40] for flour produced here in Qarshi. It used to be 15,000-16,000 sums," she said.

Prices in the capital, Tashkent, are about 10 percent higher -- some 50,000 sums for a sack of flour. There has also been a shortage of vegetable oil in recent weeks -- despite a price hike. Now a liter of oil costs $3.50 in Tashkent.

The United Nations estimates that one-third of the country's 26 million people live below the poverty line. Some sources inside the country claim the figure is higher, and that half the population lives on less than $1 a day.

Hagger says the GDPs of commodity exporters like Uzbekistan are likely to be high in the short term, as world prices for natural gas, oil, cotton, and gold are likely to stay high in 2008-09 before easing slightly.

But she says the reliance of economies like Uzbekistan's on the export of natural resources makes them unsustainable. "The external conditions are very favorable for the Uzbek economy at the moment. But if, for example, commodity prices drop sharply, that would really hit growth quite badly, because the domestic market is not particularly well-developed, living standards are still very low. So the economy is very vulnerable to external conditions," she said.

Economists like Hagger suggest that the Uzbek outlook is bleak, with poverty remaining widespread and Uzbekistan remaining "quite a poor country" -- even though its population sits on some of the largest fossil-fuel deposits in the world.

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