Uzbekistan’s economy in 2025: ten key investor insights from Freedom Broker

Uzbekistan’s economy grew by 7.7% in 2025, inflation slowed to 7.3%, the soum strengthened by nearly 7%, and the country’s sovereign rating was upgraded to BB. The banking sector set a new profit record, but growth still relies on state stimulus and commodity dynamics. Freedom Broker sums up the investment results of the past year.

1. Fast growth without a structural breakthrough
Gross domestic product rose by 7.7% — above initial expectations. In dollar terms, the economy exceeded $145 bn.

However, the nature of growth remains largely inertial: the state continues to play an active role, while credit expansion and favourable external conditions provide significant support.

The key question is quality. Labour productivity growth and convergence with income levels in developed countries are progressing noticeably slower than desired.

2. Disinflation — not only the result of interest rates
Inflation slowed from 9.8% to 7.3%, while the central bank’s base rate was held at 14%. At first glance, a classic victory for tight monetary policy.

However, lending to the economy grew by more than a third, with the retail segment up 51%. This points to limited effectiveness of the interest rate channel amid high liquidity and active fiscal support.

A significant role in slowing inflation was played by the strengthening of the national currency.

3. The soum strengthened — the economy became more dependent
For most of the year, the Uzbek soum strengthened against the dollar and ended the year up nearly 7%. This reduced imported inflation and partly eased the burden on the budget from servicing external debt.

But the strengthening was driven by a structural excess of foreign currency supply — primarily due to gold exports.

The strong role of the commodity sector increases the economy’s sensitivity to global price dynamics.

4. Banks — the main winner of 2025
The banking system ended the year with record net profit of 15.5 trillion soum, more than double the previous year’s figure. The share of non-performing loans fell to 3%.

The sector is showing resilience, growing fee income and strengthening capital buffers. For the capital market, this is a key stabilising factor.

5. Retail is growing faster than the corporate segment
In recent years, the lending structure has shifted noticeably: the share of loans to individuals has approached 36–37% of the portfolio.

This increases the banking system’s sensitivity to household income dynamics and interest rate conditions. Portfolio quality remains stable for now, but in the medium term risks are shifting precisely to this segment.

6. The deposit base strengthened despite lower rates
Deposit rates gradually declined over the year, yet banks’ deposit portfolios grew by more than a third. This indicates growing trust in the banking system and declining dollarisation of savings.

For financial stability, this is an important indicator — the funding base remains stable.

7. The government debt market expanded, but the yield curve is distorted
The primary market for government securities expanded significantly. Yields on long-term instruments remain noticeably higher than short-term ones, reflecting a shortage of long instruments and a maturity premium.

The formation of a полноценная debt curve is the next stage in developing the domestic capital market.

8. Sovereign rating — a qualitative market signal
The upgrade to BB by Fitch and S&P was an important symbolic and practical step. It lowers the cost of external funding and broadens access to international investors.

For a country with a developing capital market, such a signal is systemic in importance.

9. The stock market recovered but did not broaden
The TSMI and UCI indices ended the year in positive territory. However, trading volumes fell by nearly a fifth, and growth was driven by a limited pool of liquid stocks — mainly in the financial sector.

Privatisation and new IPOs, which the market had expected, were effectively put on hold. This limits inflows of fresh liquidity and new investment ideas.

10. 2025 — strengthening the foundation, not changing the model
The economy demonstrated resilience: high reserves, moderate debt, a strengthened banking sector, and improved ratings.

But a structural transition to a more diversified and productive growth model remains a task for the future. Dependence on commodity exports and the active role of the state persist.