Uzbekistan experienced rampant inflation of around 1000% per year immediately after independence (1992–1994). Stabilization efforts implemented with guidance from the IMF paid off. The inflation rates were brought down to 50% in 1997 and then to 22% in 2002. Since 2003 annual inflation rates averaged less than 10%. Tight economic policies in 2004 resulted in a drastic reduction of inflation to 3.8% (although alternative estimates based on the price of a true market basket put it at 15%). The inflation rates moved up to 6.9% in 2006 and 7.6% in 2007 but have remained in the single-digit range.
The government of Uzbekistan restricts foreign imports in many ways, including high import duties. Excise taxes are applied in a highly discriminatory manner to protect locally produced goods, although the excises taxes were removed in for foreign cars in 2020. Official tariffs are combined with unofficial, discriminatory charges resulting in total charges amounting to as much as 100 to 150% of the actual value of the product, making imported products virtually unaffordable. Import substitution is an officially declared policy and the government proudly reports a reduction by a factor of two in the volume of consumer goods imported. A number of CIS countries are officially exempt from Uzbekistan import duties. Uzbekistan has a Bilateral Investment Treaty with fifty other countries.
Thanks in part to the recovery of world market prices of gold and cotton (the country’s key export commodities), expanded natural gas and some manufacturing exports, and increasing labor migrant transfers, the current account turned into a large surplus (between 9% and 11% of GDP from 2003 to 2005). In 2018, foreign exchange reserves, including gold, totaled around US$25 billion.
Uzbekistan is predicted to be one of the fastest-growing economies in the world (top 26) in future decades, according to a survey by global bank HSBC.
Tashkent, the nation’s capital and largest city, has a four-line metro built in 1977, and expanded in 2001 after ten years’ independence from the Soviet Union. Uzbekistan and Kazakhstan are currently the only two countries in Central Asia with a subway system. It is promoted as one of the cleanest systems in the former Soviet Union. The stations are exceedingly ornate. For example, the station Metro Kosmonavtov built in 1984 is decorated using a space travel theme to recognize the achievements of mankind in space exploration and to commemorate the role of Vladimir Dzhanibekov, the Soviet cosmonaut of Uzbek origin. A statue of Vladimir Dzhanibekov stands near a station entrance.
There are government-operated trams and buses running across the city. There are also many taxis, registered and unregistered. Uzbekistan has plants that produce modern cars. The car production is supported by the government and the Korean auto company Daewoo. In May 2007 UzDaewooAuto, the car maker, signed a strategic agreement with General Motors-Daewoo Auto and Technology (GMDAT, see GM Uzbekistan also). The government bought a stake in Turkey’s Koc in SamKochAvto, a producer of small buses and lorries. Afterward, it signed an agreement with Isuzu Motors of Japan to produce Isuzu buses and lorries.