Uzbekistan's Economy Booms With Textile and Renewable Energy Investments
Uzbekistan's economy is booming, with a surge in investments in the textile industry and renewable energy projects. Meanwhile, its neighbour Kazakhstan faces challenges in maintaining its economic stability.
Uzbekistan's economy has seen remarkable growth in recent years. Between 2020 and 2024, its foreign direct investment (FDI) soared to $2.84 billion, a 30% increase. This growth is partly due to the country's strategic shift towards diversification, with both Uzbekistan and Kazakhstan adopting a multi-vector approach to accept investments from various global actors.
However, Uzbekistan's economic progress remains fragile. It faces challenges such as investment security, underdeveloped capital markets, lack of rule of law, and a shortage of skilled workers. Despite these hurdles, the country is attracting international investors, with around 220 German companies already active there. This trend is expected to continue, potentially challenging Kazakhstan's previous dominance in the region.
Kazakhstan, on the other hand, is heavily reliant on its energy sector, which accounts for around 60% of its FDI. While its FDI has been stable, it saw a negative result in the last year, indicating that foreign investors withdrew more money than they invested. To maintain its economic stability, Kazakhstan needs to consider structural reforms to move away from its resource-based status quo.
Uzbekistan's economy is thriving, with significant investments in various sectors and a growing appeal to international investors. While challenges remain, the country is poised to become a significant economic powerhouse in Central Asia. Meanwhile, Kazakhstan faces the task of diversifying its economy to ensure long-term stability.
