The Central Bank of Uzbekistan has voiced concerns regarding potential loan repayment difficulties for the population, alongside other emerging financial risks. This is detailed in the 2024 Financial Stability Review published by the Central Bank.
Debt Burden
In 2024, the overall household debt-to-income ratio averaged 34 percent. A significant portion of borrowers (40 percent)—a high figure—allocate half their monthly income to loan repayments. Economic shocks, such as inflation, wage reductions, or unemployment, could severely impact banks’ financial health. Projections indicate that four major banks may face a capital adequacy crisis by 2027.
Liquidity and Deposits
Current bank liquidity levels do not pose immediate concerns. Commercial banks are projected to maintain sufficient funds and liquid assets through 2025. Reserve funds could offset potential shortfalls, even with increased expenditure in some institutions. However, reliance on large clients presents a risk; significant withdrawals could destabilize some banks.
Housing and Automobile Markets
In 2024, Uzbekistan’s housing market saw property prices 17% above their real value, presenting a risk. Reduced transaction volumes and stricter mortgage lending conditions have been observed. While mortgage loan balances have slightly decreased, they remain substantial. The auto loan market saw improvement last year, with more cautious lending practices reducing the debt burden in this sector. Automobile prices have also stabilized.
Microloan Defaults – A Significant Risk
High rates of non-performing microloans and insufficient reserves to cover losses present a considerable risk in the microfinance sector. The growing number of borrowers and overall microloan volume amplify future risks.
Impact of International Conflicts
Global economic instability and uncertainty persisted in 2024, exacerbated by geopolitical tensions, including wars, sanctions, and trade disputes. This negatively affected international trade, investment, and economic decision-making. Low confidence in international trade policy remains a key concern; economic conflicts pose a more significant threat than the conflicts themselves.
Inflation Eases, but Concerns Remain
Global inflation reached 4.9% by the end of 2024, down 1.1% from 2023. The IMF projects further declines to 4.3% in 2025 and 3.6% in 2026. However, concerns remain. Renewed geopolitical tension and economic fragmentation in early 2025 negatively impacted trade, potentially leading to inflationary pressures. Higher inflation may necessitate maintaining high interest rates, hindering credit access.
The Uzbek Sum depreciated by 4.7% against the US dollar in 2024, a lower rate than the approximately 10% depreciation seen in 2023.
Risks to the Uzbekistani Economy
A 2024 Central Bank survey identified key threats to the nation’s financial system. 53% of respondents cited external geopolitical risks (wars, political instability) as the primary concern; 37% feared accelerated inflation.
Other significant risks included bank liquidity issues, borrower defaults, economic recession, and the impacts of climate change.
Despite this, 56% of participants deemed the likelihood of systemic risks within the next year low, while 61% considered such risks possible within a 1-3 year timeframe. Confidence in Uzbekistan’s financial system over the next three years increased among 67% of respondents, with 31% expressing partial confidence. Overall, most anticipate no major short-term economic shocks, but acknowledge medium-term possibilities.