Uzbekistan is strategically positioning itself as a pivotal manufacturing hub within a developing Central Asian trade corridor, a significant response to Europe’s ongoing recalibration of global supply chain dependencies. The nation, historically recognized as a crucial crossroads for commerce, is actively transforming into a manufacturing bridge between Europe and Asia, encouraging international businesses to transition from simple sales to localized production. This strategic pivot is underpinned by a robust economic trajectory and a deliberate governmental shift towards fostering domestic industrial capabilities.
Since 2017, Uzbekistan has experienced consistent economic expansion, with annual GDP growth averaging 5.3%, a trend that has coincided with improvements in its private sector development landscape, as noted by the World Bank. The country’s attractiveness to foreign investment reached an unprecedented $11.9 billion (€10.24 billion) in 2024. This surge highlights a growing confidence in Uzbekistan’s economic reforms and its potential as an investment destination, particularly as it seeks to deepen its integration into global value chains.
The nation’s burgeoning imports, encompassing categories from heavy machinery and metals to lithium-ion batteries, have prompted a strategic evolution. Rather than imposing restrictive measures on incoming goods, the Uzbek government is now focused on localizing these import needs through strategic alliances with international manufacturers. This approach is fundamentally reshaping the role of customs. “Customs used to be seen as a controlling body at the border. Now it’s a facilitator of trade,” remarked Farkhod Olimjonov, head of strategy implementation at Uzbekistan’s Customs Committee. The implementation of reforms, such as the elimination of paper declarations and the introduction of remote e-clearance, aims to accelerate the movement of goods and encourage their domestic processing.
These policy shifts are demonstrably altering trade patterns. In the past nine months, imports of certain goods, including transformers, copper, and chemical products, have significantly decreased. Concurrently, there has been a substantial increase, nearing 50%, in the number of entrepreneurs importing raw materials for local manufacturing. This indicates a growing ecosystem where imported inputs are increasingly being transformed into finished or semi-finished goods within Uzbekistan.
The evolving trade environment is drawing a positive response from international businesses. Inditex, the global fashion conglomerate behind brands like Zara, is expanding its collaboration with the Uzbek government to streamline customs procedures and enhance local production capabilities. Nigar Allaverdiyeva, a representative from Inditex Azerbaijan, stated, “We appreciate the simplified procedures and reduced tariffs. Our goal now is to finalise agreements that will allow a full range of our products to benefit from these privileges.” This sentiment is mirrored across various sectors, with large state-owned enterprises like the Navoi and Almalyk mining and metallurgical plants actively seeking partners for domestic industrial production. Sharifjon Fayziyev, an engineer at Navoi, elaborated, “Importing heavy machinery or excavator parts from distant countries costs time and money. If local entrepreneurs produce them here, we save foreign currency, reduce downtime, and create jobs.”
### Strategic Opportunities for European Engagement
For European economies, Uzbekistan’s transformation presents a significant strategic opening. Rudolf Lukavski, commercial counsellor of the Austrian Embassy in Tashkent, described Uzbekistan as “a large, young and attractive market with growing investor confidence.” He noted a tangible increase in Austrian investment, stating, “When I first visited in 2017, there were no Austrian investors here. Now there are more than 50. We see opportunities in green technology, agriculture, healthcare, and manufacturing.” This optimism extends to various business segments, with companies like Chinese office product manufacturer Deli expanding their reach via Uzbekistan’s rail network, and medical supplier Adina-Med, working with German partners, identifying the market as one of the most dynamic in the region.
### A Global Trend of Production Localization
Uzbekistan’s “produce where you sell” model resonates with a broader global economic trend where governments are actively encouraging companies to diversify production away from concentrated regions. This strategic imperative aims to build more resilient supply chains by fostering integration with new partners. In textiles, for instance, companies are importing raw fabrics, manufacturing garments locally, and then exporting finished apparel to key European markets like Italy and France. Similarly, the domestic refinement of locally sourced gold is enabling Uzbekistan to export processed jewelry to global markets, thereby transforming raw material trade into value-added manufacturing. Deputy Prime Minister Jamshid Xujaev views this as part of a new industrial cycle, stating, “Our GDP has doubled in eight years, and exports of finished products are growing faster than ever. We want to build industries that not only replace imports, but also compete globally.” This approach to domestic manufacturing and export growth is a significant policy objective for the nation.
This drive for localized manufacturing is also a point of discussion in other major economies. In the United States, President Donald Trump has advocated for similar policies, employing measures such as higher tariffs on foreign goods to incentivize companies to bring production back to American soil. This illustrates a shared global interest in strengthening domestic industrial bases and reconfiguring trade relationships. Uzbekistan’s reforms are occurring amidst a broader reevaluation of supply chains across Eurasia, with manufacturers seeking production bases closer to consumer markets. The country’s expanding industrial capacity and logistics infrastructure are becoming increasingly integral to this regional economic realignment. The next critical phase for Uzbekistan involves ensuring that this burgeoning investor interest translates into sustainable, export-oriented production that adheres to international quality standards. Successful implementation of this strategy could significantly redefine Central Asia’s global economic role, elevating it from a transit corridor to a robust production hub.
Lucas turns raw market data into actionable strategies, spotting trends in a heartbeat. With 9 years managing portfolios, he treats market volatility like a surfer riding big waves—balance and timing are everything. On weekends, Lucas hosts “Bull & Bear Banter” podcasts, showing that finance discussions can be as entertaining as they are informative.