Fitch affirms Uzbekistan's BB- rating with stable outlook

By Ovunc Kutlu

ISTANBUL (AA) - Fitch Ratings said Friday it affirmed Uzbekistan's long-term foreign currency issuer default rating at BB- with a stable outlook.

The rating agency said Uzbekistan's rating is supported by the country's low public debt, sizeable fiscal and external buffers, high GDP growth, and reform progress to liberalize its economy.

Those factors, however, are balanced against low GDP per capita, weak governance, high dependence on commodities and dollarization, and a large and uncompetitive state presence in the economy.

Fitch said Uzbekistan's gross domestic product (GDP) rose 6.4% in the first half of this year, helped by surging investment and an 8.6% increase in real wages.

The rating agency projects full-year economic growth to come in at 6.2% this year, following 6.3% last year, and then moderating to 5.5% in 2026.

"Inflation picked up to 10.5% in July, from 8.1% in April, on energy price hikes, but core inflation has trended down, 2.6pp this year, and household inflation expectations also fell from 13.6% at end-2023 to a still elevated 12%," it said.

Fitch estimates inflation averaging 9.5% in 2024, 8% in 2025, and 5.8% in 2026, above the Central Bank of Uzbekistan's inflation target of 5%.