The EBRD believes the economy of Central Asia’s most populated state will continue its strong showing in 2020.

Uzbekistan’s GDP is expected to grow by 5.5 per cent in 2019 and 5.8 per cent in 2020, fuelled by the strong performance of its industry and construction sectors.

Further, the Bank’s latest Regional Economic Prospects report notes very significant 45 per cent year-on-year increase of exports, reflecting Uzbekistan’s trade liberalisation and regional integration policies, and over 60 per cent year-on-year expansion of credit, reflecting the country’s growing appetite for infrastructure and business investment.

The country’s average inflation rate decelerated to 14.1 per cent in the first three quarters of 2019.

The EBRD also welcomes further liberalisation of Uzbekistan’s foreign exchange market. As a result, the exchange rate has depreciated by around 12 per cent since early 2019.

“As of August 2019, the monetary authorities have removed the 5 per cent limit on daily exchange rate fluctuations, allowing the rate to be determined by the market. In addition, the sale of foreign currency by commercial banks is now allowed for purposes other than business or tourism travel,” says the report.

The pace of growth in the EBRD’s emerging economies is slowing on the back of a weaker global economic outlook, pressure from slower growth in the eurozone and China, US-Chinese trade tensions and a worldwide contraction in automobile production, according to the EBRD report.

A deceleration in economic growth in the EBRD regions this year has also reflected continued economic weakness in Turkey and a slowdown in Russia, it says.

The EBRD’s Regional Economic Prospects report sees average growth of 2.4 per cent in 2019 across all economies where the EBRD invests, compared with 3.4 per cent in 2018.

The report sees a recovery to 2.9 per cent in 2020, a small downward revision from the forecast of 3.0 per cent in May and still clearly below 2017’s growth rate of 3.8 per cent.

Next year’s upturn will be driven primarily by a stronger performance in Russia and Turkey. The report predicts steady growth in the EBRD’s southern and eastern Mediterranean region.

The outlook sees a strong correlation between growth in emerging Europe and the trends observed at global level and in advanced European economies. It notes that global growth forecasts are currently at their lowest level since the start of the global financial crisis. The eurozone growth outlook is at its lowest since 2013.

“Given its deep integration in ‘factory Europe’ and the importance of the automotive industry for the regions’ economies, emerging Europe is highly vulnerable to weakness in the automotive sector and a further slowdown in Germany,” the report says.

It points out that the Slovak Republic is the world’s largest car producer relative to the size of its population. Other economies in central and south-eastern Europe, such as Hungary, Poland, Romania and Slovenia, are also highly dependent on the automotive industry.

The report says a further escalation of trade tensions and rising global uncertainty about policy, including over the United Kingdom’s plans to leave the European Union, constitute major risks to its latest outlook.

Economies in the EBRD regions are particularly vulnerable to a further slowdown in the eurozone, a deeper-than-anticipated slowdown in China and protracted weakness in the automotive sector globally.

The direct impact of a “soft” Brexit on most of the economies in the EBRD regions is expected to be limited. Indirect effects – through weaker growth in the eurozone – are estimated to be much larger in the event of a “hard” Brexit, particularly in south-eastern Europe.

In this region, the slowing momentum in the approximation with the European Union and the latest controversy regarding the prospects for EU accession in the Western Balkans could have a negative impact on investor sentiment and the growth outlook.

The EBRD report sees economic growth moderating in most of central Europe and the Baltic states and south-eastern Europe, in line with weakening euro-area growth and headwinds to global trade.

In central Europe and the Baltic states growth is seen slowing to 3.7 per cent in 2019 and further to 3.2 per cent in 2020, compared with 4.2 per cent last year. The EBRD wound back sharply its 2019 forecast for the Slovak Republic by 1.1 percentage points to 2.5 per cent.

In south-eastern Europe, the Bank expects growth of 3.3 per cent this year and 3.0 per cent in 2020, after 3.4 per cent in 2018.

After sliding to 0.7 per cent in the first half of this year, due to a hike in value-added tax, falling oil prices and weak investment, growth is expected to pick up in Russia as a result of increased public-investment spending and a more accommodative monetary policy.

This recovery to 1.1 per cent in 2019 and 1.7 per cent in 2020 still leaves growth below the 2.3 per cent seen in 2018. But the report says the stronger growth momentum in Russia will support growth in eastern Europe and the Caucasus and Central Asia.

The EBRD foresees a return to economic growth in Turkey in 2020, after a contraction in 2019 that will probably be smaller than previously expected on the back of credit growth, fiscal stimulus and rising consumer confidence. The economy is likely to grow by 2.5 per cent next year after shrinking by 0.2 per cent in 2019.

In the southern and eastern Mediterranean region growth is expected to remain broadly unchanged compared with the figures seen in 2018. Continued high growth in Egypt is expected to be driven by high levels of investment and a strong tourism season on the back of reforms in the sector.

Lebanon’s already-bleak outlook is subject to significant downside risks in light of the current political instability and recent social uprisings.