Industry and Services Supported Uzbekistan’s Business Climate in June

## Uzbekistan's Business Climate Strengthens in June, Driven by Industry and Services

**Tashkent, Uzbekistan** – Uzbekistan's business climate saw an uptick in June, primarily bolstered by positive trends in the industrial and services sectors, according to the latest analysis from the Center for Economic Research and Reforms (CERR). The findings, derived from monthly nationwide surveys of entrepreneurs, are used to calculate a composite Business Climate Index, which gauges current business conditions and future expectations.

**Overall Business Climate Index Rises**

In June, the composite Business Climate Index reached 58 points, a 1-point increase from May. An index value exceeding 50 points signifies a prevalence of optimistic sentiment within the business community. While the Current Business Conditions Index registered 48 points, indicating a more reserved assessment from businesses, the Expectations Index soared to 68 points, reflecting sustained high optimism for the upcoming three months.

Key indicators of business activity showed positive movement. The proportion of entrepreneurs rating current business conditions as "good" rose to 48%, up from 44% in May, signaling an improvement in present business sentiment. Furthermore, 40% of respondents reported an increase in demand for goods and services over the past three months, compared to 37% in May. However, the percentage of entrepreneurs reporting an increase in employee numbers slightly dipped to 24% from 28% in the previous month.

**Sectoral Performance: Mixed Results**

A closer look at sectoral dynamics reveals improved business climate assessments in industry and services, while agriculture and construction experienced a slight decline.

**Agriculture:** The composite Business Climate Index in agriculture stood at 64 points, a modest decrease from 70 points in May. Despite this, both current assessments and entrepreneurial expectations within the sector improved over the month. Fifty-four percent of entrepreneurs reported an improved situation over the past three months, up from 47% in May. Current business conditions were deemed "good" by 52% of respondents, an increase from 49%, and 32% reported an increase in employee numbers, compared to 28% previously.

**Construction:** The construction sector's composite Business Climate Index fell by 4 points to 65, down from 69 in May. Nevertheless, positive sentiment persisted across the main business activity indicators. Forty-nine percent of construction companies reported improved conditions over the past three months, a 2-percentage-point rise from 47% in May. However, the percentage of companies increasing their workforce dropped to 36% from 42% in the prior month. Similarly, growth in demand for products and services was reported by 36% of construction companies, a significant 15-percentage-point decrease from 51% in May.

**Industry:** Despite remaining below last year's level, the composite Business Climate Index in industry climbed 3 points to 49 from 46 in May. This moderate index value was primarily influenced by industrial enterprises' assessments of current conditions. Forty-three percent of industrial enterprises rated their business conditions as "good," a notable increase from 34% in May. While 55% anticipate an increase in employee numbers over the next three months (down from 61% previously), short-term expectations remained robust, with 74% of industrial enterprises expressing optimism about their development prospects.

**Services:** The services sector witnessed a 3-point increase in its composite Business Climate Index, reaching 59 from 56 in May, maintaining its positive trajectory. This growth was largely attributed to improved short-term expectations, which rose by 6 points to 67 from 61 in the preceding month. Business activity indicators in the services sector remained positive, with 76% of companies optimistic about their development prospects over the next three months, and 38% reporting an improvement in current business conditions over the past three months.

**Barriers to Business Activity Receding**

Encouragingly, the proportion of entrepreneurs reporting no barriers to doing business increased to 60% at the end of June, a 3-percentage-point rise from 57% in May. The highest rates of positive responses were observed in services (63%), agriculture (59%), construction (53%), and industry (52%).

Among the most frequently cited constraints on entrepreneurial activity were taxation issues (20%), encompassing tax administration and rates; banking-related problems (14%), including access to credit and interest rates; insufficient demand (8%); and other financial difficulties (8%).

Specific challenges varied by economic activity. In agriculture, financial difficulties and land access were most pressing. Industrial respondents frequently highlighted concerns related to electricity supply and credit access. Construction companies pointed to financial constraints, while the services sector's most significant issues were tax administration and insufficient demand.

**For further information, please contact:**

CERR Sector for the Study of Industry Competitiveness and Investment Activity: Tel.: (78) 150 02 02 (441)

CERR Public Relations and Media Sector: Tel.: (78) 150 02 02 (417)