Uzbekistan Enhances Trade Ties with Pakistan to Improve Economy
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Uzbekistan may enhance bi-lateral trade with Pakistan as a safeguard against lower commodity prices and a downtrodden world economy. Uzbekistan is a relatively new nation, which gained independence in 1991 and remains a developing nation. The economy enjoyed 8.0% GDP growth in 2015.
Uzbekistan and Pakistan have shared low trade volume throughout the years, and it remains to be seen if increased trade will benefit both nations. Uzbekistan is a top cotton producer, achieving 7.0% growth for agricultural products in 2015.
Uzbekistan may enhance bi-lateral trade with Pakistan as a safeguard against lower commodity prices and a downtrodden world economy. Uzbekistan is a relatively new nation, which gained independence in 1991 and remains a developing nation. The economy enjoyed 8.0% GDP growth in 2015.
Uzbekistan and Pakistan have shared low trade volume throughout the years, and it remains to be seen if increased trade will benefit both nations. Uzbekistan is a top cotton producer, achieving 7.0% growth for agricultural products in 2015.
Additionally, Uzbekistan uses a robust industrial base to export machine equipment to various parts of Asia, and the construction sector, in particular, contributed to Uzbekistan’s economic surge. The country has plenty of valuable natural resources that include natural gas and a diverse array of precious minerals.
Weak Spot
Uzbekistan’s has enjoyed a steady rise in growth throughout the years because of natural resource extraction, but the country is far too dependent on commodities at a time when diversification is key. Leaders are in denial over the seriousness of the situation, maintaining a rosy projection of 7.6% growth for 2016.
Officials realize, however, that they must take action soon, which is why the government hopes that trade with Pakistan would provide a boost to the business community. Authorities also realize that commodity demand has waned, which may force the government to shift focus on other sectors to retain solid growth.
One of the reasons why Uzbekistan has excelled in certain sectors is because of a tight control over the economy. President Islam Karimov has ruled the country since the early 1990s when the Soviet Union collapsed.
He ran beyond his official two-term limit, fueling further criticism of his administration. Karimov’s tenure is controversial, but his efforts in liberalizing the economy have been effective, and the government wishes to attain over $430 million in privatization deals by summer.
Uzbekistan’s Authoritarianism
Uzbekistan transitioned to a democracy, but the president holds ultimate authority and Karimov rules as a despot. The state is also known for high levels of corruption, and leaders appear unwilling to address the issue. Furthermore, Uzbekistan has a larger problem in the form of human rights abuses, and its agriculture sector is tainted with allegations of forced labor.
Petitioners have pressed the World Bank to suspend all agricultural financing in Uzbekistan until the government establishes a fair work system, notes EurasiaNet. The government has denied the allegations. While such a petition will not impact the economy in the short-term, such allegations further erode credibility, and the human rights issue is one of many factors that prevent Uzbekistan from reaching its full potential.
