FOREIGN TRADE

TRADE BALANCE, EXPORT AND IMPORT

The processes of gradual liberalization of foreign economic relations began to pay off. In 2004 the positive tendencies in the development of foreign trade that had been noted in 2003 strengthened. During the period under review, the foreign trade turnover of Uzbekistan increased by 29.6% and equaled USD 8.7 bln. Main Indicators of Foreign Economic Activity of Uzbekistan

Indicators

2003

2004

Including

Change in volume, %

03/IV*

04/IV*

2004 to 2003

04/IV to 03/IV

Foreign trade turnover

6,689.2

8,669.0

1,965.2

2,430.9

129.6

123.7

    CIS countries

2,105.4

3,002.6

606.2

857.2

142.6

141.4

    Non-CIS countries

4,583.8

5,666.4

1,359.0

1,573.7

123.6

115.8

Exports

3,725.0

4,853.0

1,105.5

1,326.3

130.3

120.0

    CIS countries

969.2

1,528.4

274.4

425.9

157.7

155.2

    Non-CIS countries

2,755.8

3,324.6

831.1

900.4

120.6

108.3

Import

2,964.2

3,816.0

859.7

1,104.6

128.7

128.5

    CIS countries

1,136.2

1,474.2

331.8

431.3

129.7

130.0

    Non-CIS countries

1,828.0

2,341.8

527.9

673.3

128.1

127.5

Trade balance

760.8

1,037.0

245.8

221.7

X

X

    CIS countries

-167.0

54.2

-57.4

-5.4

X

X

    Non-CIS countries

927.8

982.8

303.2

227.1

X

X

Structure of foreign trade turnover, %

100.0

100.0

100.0

100.0

X

X

    CIS countries

31.5

34.6

30.8

35.3

X

X

    Non-CIS countries

68.5

65.4

69.2

64.7

X

X

At the same time, 56.0% of the total volume of foreign trade turnover consisted of export operations, while imports accounted for 44.0%.

Exports grew at a higher rate than imports did - by 30.3% and 28.7% respectively. This was determined by the results of the previous nine months, during which exports grew by 34.6% against the corresponding period of 2003, while imports increased by 28.8%. In the fourth quarter the opposite situation was observed, with imports growing more rapidly, reaching 28.5%, while exports grew by only 20.0%. Measures taken on customs and tariff regulations of import operations played a significant role in increasing the volume of trade. Thus, in January 1, 2004 in order to create favorable conditions for the further modernization and technological re-equipping of operating enterprises, the Government introduced zero tariff rates for imported machines, machinery and technological equipment, including those for the production of construction materials and other construction-related items and goods. The process of certification of imported goods was simplified. Growth of economic activity (the level of GDP increased by 7.7% in comparison with that of 2003) also facilitated the increase of imported supplies due to the increase in gross domestic demand of enterprises for investment and intermediate goods.

One of the factors that stimulated the growth of exports was the increase of export prices as a result of the favorable dynamics of the world market conjuncture for the main export commodities of the country. For example, gold prices at the end of 2004 were characterized by a continuance of their record growth over the last 16 years, and in early December of 2004 reached the level of USD 449 per ounce, as opposed to USD 330 per ounce in 2003. The dynamic growth of export volumes, partially due to the more rapid growth of exports of goods with high value added, was promoted by the introduction of convertibility of the national currency in current international operations.

During the period under review the coefficient of exports' covering imports was equal to 1.27; as a result, the active trade balance amounted to USD 1037 mill, demonstrating an increase of USD 276.2 mill. over the corresponding period of 2003. In the fourth quarter, according to calculations, the positive foreign trade balance equaled USD 221.7 mill. Foreign trade with non-CIS countries accounted for 95% of the active balance of trade turnover, or USD 982.8 mill., which remained stable during all four quarters. The positive balance of trade turnover with CIS countries amounted to USD 54.2 mill. This was achieved thanks to the first three quarters. The fourth quarter resulted in a negative balance of 5.4 million USD.

Ratio of Exports and Imports of Goods (Services)


    Source: State Committee on Statistics of Uzbekistan
    * the author's calculations based on the data from the State Committee on Statistics of Uzbekistan


CHANGES IN EXPORT STRUCTURE

Qualitative changes in the structure of exports continued. In 2004, an increase in the volume of exports was observed in practically all commodity groups. A significant increase was observed in the group of non-raw commodities (by 1.5-2.0 times) in accordance with the increase in production volumes in comparison with raw-material types of products (by 1.2-1.7 times). This tendency was observed throughout all four quarters of 2004. Thus, in comparison with the corresponding period of 2003, exports of chemical products increased by 2.0 times, foodstuffs - by 1.8 times, and machinery and equipment - by 1.6 times. At the same time, in the fourth quarter, exports of machinery and equipment increased by two times in comparison with the corresponding period of the previous year. The share of exports of chemical products equaled 4.7% (an increase of 1.6 percentage points over the same period of 2003), the share of foodstuffs - 3.8% (an increase of 1.1 percentage point), and machinery and equipment - 7.4% (an increase of 1.5 p.p.) Commodity Structure of Exports

Commodity groups

Share in total volume of exports, %

Change in volume, %

2003

2004

Including

2004 to 2003

04/IV to 03/IV

03/IV*

04/IV*

    Cotton fiber

19.8

18.1

26.1

19.2

118.5

88.3

    Foodstuffs

2.7

3.8

3.0

4.0

183.0

158.1

    Chemical products, plastics, and plastic goods

3.1

4.7

3.5

5.2

200.3

176.3

    Energy carriers

9.8

12.4

10.0

11.6

165.1

139.4

    Non-ferrous and ferrous metals

6.4

8.6

5.6

8.9

174.4

189.0

    Machinery and equipment

5.9

7.4

5.2

8.7

163.8

200.0

    Services

14.4

11.8

13.2

11.5

107.2

105.2

    Other

37.9

33.2

33.4

30.9

114.0

111.2

Total

100

100.0

100

100.0

130.3

120.0

The volume of exports of products of non-organic chemistry, fertilizers, perfumery-cosmetic products, plastics, grains, fruits, vegetables, and automobiles grew in 2004. Exports of textile clothes and fabrics increased significantly among the products of light industry. Enterprises, under such associations as "Uzeltechprom", "Uzmetkombinat", and such associations as "Uzavtoprom", "Uzkimyosanoat", and "Uzselhozmashkholding", increased their export volumes.

The volume of exports of services increased by 7.2% over 2003, including by 5.2% in the fourth quarter of 2004. In 2004, transportation services accounted for 72% of the total volume of services, including more than 50% from services of railroad and air transportation. The shares of telecommunication (5.1%), tourism (4.8%), and computer and information services (0.1%) were insignificant.

The share of exports of cotton fiber, one of the raw-material export commodities, decreased in comparison to the results of 2003 by 1.7 percentage points and amounted to 18.1%, while its export volume increased by 18.5%. This occurred both because of an increase in export volumes and the favorable prices. In the fourth quarter, the volume of export of cotton-fiber decreased, in comparison with the corresponding period of 2003, and amounted to 88.3%.

Exports of energy carriers increased by 65.1% compared to 2003, while exports of non-ferrous and ferrous metals increased by 74.4%. As a result, the share of energy carriers in total exports increased by 2.2 percentage points and amounted to 8.6%. Significant growth of exports of non-ferrous and ferrous metals (by 89.0%) was observed in the fourth quarter (look at the Table Commodity Structure of Exports). Exports of natural gas, oil and oil products, copper and its products, rod steel and steel angles, chemical products, machinery and equipment increased.

Some limits in the access of Uzbek goods to world markets create certain difficulties in enlarging exports. For example, certain trade issues which regulate Uzbek exports of textiles and clothing were agreed with the European Union in terms of separate bilateral agreement in 1993, and were prolonged up to 2004. According to this agreement, exports of cotton yarn from Uzbekistan to EU have to undergo a special procedure of licensing, which limits exports of that product.

CHANGES IN IMPORT STRUCTURE

Certain changes were observed in the commodity structure of imports as well. During the period under review further optimization of the structure of imports was observed. The volume of imports of products that are not produced in Uzbekistan but are necessary for the production cycle of enterprises, increased. That includes growth of imports of machinery and equipment, chemical products, non-ferrous and ferrous metals. At the same time, imports of foodstuffs decreased Main Indicators of Foreign Economic Activity of Uzbekistan

 

Share in total volume of exports, %

Change in volume, %

2003

2004

Including

2004 to 2003

04/IV to 03/IV

03/IV*

04/IV*

Foodstuffs

9.9

6.8

9.4

7.3

88.9

98.8

Chemical products, plastics and plastic goods

12.8

12.5

12.2

11.3

125.7

118.7

Energy carriers

2.7

2.1

3.7

2.5

101.6

87.1

Non-ferrous and ferrous metals

7.9

10.3

7.3

9.9

167.1

174.3

Machinery and equipment

44.4

46.0

44.9

48.9

133.3

140.0

Services

10.2

11.1

10.7

8.8

141.2

106.0

Others

12.1

11.2

11.8

11.3

118.2

123.4

Total

100

100.0

100

100.0

128.7

128.5

In comparison to the first half of 2003, the volume of imports of machinery and equipment, the leading commodity group in imports, increased by 33.3%. As a result, their share in imports increased by 1.6 percentage points, accounting for 46.0% of total imports. The import of chemical products increased by 25.7%, non-ferrous and ferrous metals - by 67.1%. Their shares in the total volume of imports were 12.5% and 10.3% respectively. Imports of such goods as technological equipment, products of organic chemistry, pharmaceutical products, fertilizers, perfumery and cosmetic products, plastics, rolled steel, and products of ferrous metals continued to increase.

Imports of energy carriers grew insignificantly, by 1.6%. Their share in the total volume of imports amounted to 2.1%. At the same time, a decrease in imports of energy carriers by 12.9% was observed in the third and fourth quarters.

The volume of imports of services increased by 41.2% in comparison with 2003, including by 6.0% in the fourth quarter, mainly because of an increase in construction works and transport services. As a result, the share of services in the total volume of imports accounted for 11.1%, including 8.8% in the fourth quarter of 2004 (look to the Table Commodity Structure of Imports).

Imports of goods in the commodity group "other" increased by 18.2% and their share in the total volume of imports increased by 11.2%. The increase was mainly due to the increase in imports of wood and wooden products, textile products, and construction materials.

Graph Change in Structure of Imports of Foodstuffs


    Source: State Statistics Committee of Uzbekistan


In comparison to 2003, imports of foodstuffs decreased by 11.1%, while their share in the total volume of imports decreased by 3.1 percentage points, equaling 6.8%. In general, decreases continued to occur in imports of meat products, flour and flour products, oil seeds and fruits, and confectionery

GEOGRAPHICAL STRUCTURE OF EXPORTS AND IMPORTS

Trade with CIS countries improved in every quarter. This indicates that traditional trade relations are strengthening. As a result, trade turnover with CIS countries equaled USD 3.0 bn. in 2004, and increased, in comparison with the previous year, by 1.4 times. During the period under review, trade turnover with foreign countries amounted to USD 5.7 bn., indicating an increase of 1.2 times. Accordingly, the share of trade turnover with partners from CIS increased from 31.5% in 2003 to 34.6% in 2004. At the same time, the share of trade turnover with foreign countries decreased from 68.5% to 65.4%.

In comparison with 2003, exports to the CIS increased by 1.58 times, as opposed to an increase in exports to foreign countries of 1.21 times. At the same time, the share of exports to CIS increased from 26.0% to 31.5%, while the share of exports to foreign countries decreased from 74.0% down to 68.5% Table Geographical Structure of Exports and Imports

countries

Share in total volume, %

Of Exports

Of Imports

2003

2004

Including

2003

2004

Including

03/IV*

04/IV*

03/IV*

04/IV*

Total

100

100.0

100

100.0

100

100.0

100

100.0

CIS countries

26.0

31.5

24.8

32.1

38.3

38.6

38.6

39.0

Kazakhstan

2.7

3.8

3.1

4.2

6.6

6.3

7.1

7.4

Russia

12.3

14.9

17,7

17.8

23.3

24.0

23.6

22.6

Tajikistan

3.3

3.0

2.5

3.0

0.8

1.0

0.5

0.8

Ukraine

3.9

2.3

-3.6

4.5

4.6

4.5

5.0

4.9

Other countries

3.8

7.5

5.1

2.6

3.0

2.8

2.4

0.3

Foreign countries

74.0

68.5

75.2

67.9

61.7

61.4

61.4

61.0

Afghanistan

2.4

2.6

2.3

3.0

 

0.1

 

0.05

Belgium

1.9

1.1

3.1

0.1

0.7

0.5

0.9

0.6

Great Britain

7.5

7.9

7.1

8.2

2.6

1.8

2.5

2.0

Germany

1.2

1.0

1.1

1.0

9.8

7.1

9.4

6.1

India

2.4

2.5

0.8

4.1

0.6

0.7

0.5

0.7

Iran

7.4

6.9

10.5

9.5

1.0

0.9

1.0

0.7

Italy

1.6

1.1

1.7

1.3

1.7

1.8

1.1

2.0

China

1.4

2.1

1.5

1.9

5.5

7.0

4.1

4.6

South Korea

1.5

1.2

1.3

1.2

7.9

9.2

8.6

7.6

Latvia

2.3

2.1

3.0

1.9

0.7

0.4

0.6

0.3

Netherlands

0.4

0.5

0.3

0.5

1.0

0.8

1.0

0.6

USA

2.9

3.1

2.5

2.4

7.7

10.3

7.3

14.3

Turkey

3.5

4.5

4.1

3.6

4.8

4.5

4.4

4.3

France

0.6

0.7

0.6

0.8

1.6

1.2

2.1

1.0

Switzerland

5.4

3.1

5.5

0.9

0.6

0.4

0.7

0.6

Japan

0.4

0.4

0.6

0.4

2.0

2.1

2.8

1.9

Other countries

31.2

27.7

29.2

27.1

13.5

12.6

14.4

13.6

This trend continued over the whole period under review. The export of such goods as foodstuffs, machinery and equipment, and non-ferrous metals to the CIS increased by more than two times during the period under review.CIS countries continue to remain the traditional market for exports of foodstuffs, energy carriers, machinery and equipment, while foreign countries continue to be a good market for such exports as cotton fiber, chemical products, and non-ferrous metals.

In 2004, in comparison to the corresponding period of the previous year, there was an insignificant but more rapid growth of imports from CIS countries than from foreign countries, by 1.30 and 1.28 times respectively. Accordingly, share of imports from CIS countries increased from 38.3% to 38.6%, while imports from foreign countries decreased from 61.7% to 61.4%. In the commodity structure of imports from CIS countries, significant increases were observed in such commodity groups as non-ferrous and ferrous metals, chemical products, and wood, while some decrease was observed in such commodity groups as foodstuffs and energy carriers. As for foreign countries, in general, an increase was observed in such commodity groups as energy carriers, machinery and equipment, and services, while some decrease was observed in such commodity groups as foodstuffs, ferrous and non-ferrous metals. CIS countries remain the leading importers of energy carriers, ferrous and non-ferrous metals, while foreign countries maintain the leading position in imports of foodstuffs, machinery and equipment, and services. The main factor preventing imports from this CIS from increasing was the low price competitiveness of their products.

The following eight countries became leading trade partners for Uzbekistan 's exports in 2004: Russia - 14.9% of total exports (157.8% to the level of 2003), Great Britain - 7.9% (137.4%), Iran - 6.9% (122.7%),Turkey - 4.5% (167.4%), Kazakhstan - 3.8% (186.4%), USA - 3.1% (140.1%), Switzerland - 3.1% (75.7%), and Tajikistan - 3.0% (121.1%). In the fourth quarter, a significant decrease in exports was observed toBelgium (4.4% to the level of the fourth quarter of 2003) and to Switzerland (19.3%).

The main share of imports (72.9%) was made up by by eight countries: Russia, whose share in total imports was 24.0% (133.0% to the level of 2003), USA - 10.3% (172.5%), South Korea - 9.2% (149.9%), Germany - 7.1% (92.8%), China - 7.0% (162.9%), Kazakhstan - 6.3% (123.0%), Turkey - 4.5% (121.7%), and Ukraine - 4.5% (125.4%). In the fourth quarter an increase in imports from USA by 2.5 times, in comparison with the corresponding period of the previous year, was observed.




2009 anno dello sviluppo