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Construction activity drives growth in Uzbekistan's GDP

Uzbekistan's construction industry has been a major driver of the Central Asian country's economic growth in recent years. 

The Uzbek economy has traditionally been one of the strongest in the region. After gaining independence, Uzbekistan suffered only a small downturn in output and was the first of all the CIS nations to resume growth. Since 2006, the average annual upturn in GDP has stood at just over eight per cent, peaking at 9.8 per cent in the third quarter of 2007. 

It's no coincidence that the construction sector has performed strongly over the same period, with the total value of work reaching $7.79 billion in 2014 and growth in the industry standing at 16.6 per cent the previous year.

New government figures show that this trend continued in the first half of 2015. GDP growth of 8.1 per cent was recorded between January and June, thanks in part to the large volume of building work carried out across the period.

Major construction schemes driving economic growth

Contractual construction activity increased by 18 per cent in the opening six months of the year, boosted by a number of major building projects.

A prime example is the Housing for Integrated Rural Development Investment Programme, which will see thousands of new homes built in some of Uzbekistan's most remote communities. In total, 12,000 modern properties will be built in 13 rural regions, including 1,320 in Kashkadarya and 1,060 in Andijan. The $2 billion scheme is being supported by loans of $100 million from both the Asian Development Bank and the Islamic Development Bank.

Another involves the redevelopment of Tashkent International Airport, which is due to receive a new terminal by 2019 at a cost of around $310 million. The terminal is expected to almost double the capacity at what is already Central Asia's biggest airport.

What opportunities does this present for the building materials trade?

Given the scale of construction work currently being undertaken in Uzbekistan, coupled with the prospect of further growth over the coming years, the country unsurprisingly has to look overseas to meet its demand for building materials. Some of these materials are hard to access within the Uzbek market, while others are not produced to a high enough standard by local suppliers, forcing developers to turn to foreign imports.

Figures published by the MIT-associated Observatory of Economic Complexity give us an insight into the biggest opportunities for overseas suppliers of building materials. In 2012, the country's single biggest building material import was refractory bricks, which represented 0.21 per cent of all imports at a value of $21.8 million.

Other major building material imports include float glass (0.11 per cent of all imports and a value of $11.3 million in 2012); glazed ceramics (0.11 per cent of imports, $10.8 million value); unglazed ceramics (0.06 per cent of imports, $6.16 million value); and building stone (0.04 per cent of imports, $4.45 million value).

Furthermore, state-owned building materials production company Uzstroymaterialy says Uzbekistan imports significant quantities of wood and metal products.

The current strength of Uzbekistan's construction industry shows no signs of abating. As such, the country represents a substantial opportunity for foreign building materials suppliers.

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