Outlook for 2011-12

• The Economist Intelligence Unit expects that the president, Islam Karimov, will retain a tight grip on power. Despite ostensible moves to give parliament greater power, there are few prospects for democratisation.
• Mr Karimov's health is subject to question, and there are doubts over who will eventually succeed him, making for a highly uncertain outlook once he departs the political scene.
• Political links with the West will be closer over the forecast period than in the late 2000s, driven by the regional security agenda. However, political and economic ties with Russia and China will also remain strong.
• Real GDP growth will pick up in 2011-12, owing to a solid performance in the Russian economy and broadly favourable export prices. We forecast that officially reported real GDP growth will be almost 9% per year in 2011-12.
• Average annual inflation is forecast to remain high in 2011-12, at around 15%, owing to high global commodity prices. Government increases to state-sector wages and welfare benefits will lead to rapid money supply growth.
• The current-account surplus will average around 13% of GDP in 2011-12, as exports remain higher than their low level in 2009.

Monthly review

• The authorities appear concerned by the spread of popular protest in the Middle East and North Africa (MENA), and have continued to crack down on possible avenues of protest and on religious freedoms.
• The government has closed the Uzbek office of Human Rights Watch (HRW), a US-based non-governmental organisation (NGO). In response, the EU has abandoned its pledge to send a delegation to Uzbekistan.
• Despite official reports of a small budget surplus in 2010, the authorities are reducing subsidies on utilities, suggesting that the fiscal position is less healthy than officially claimed.
• Monetary policy is loosening, despite a pick-up in global food and commodity prices that is pushing up inflation in Uzbekistan.
• An official programme to boost private enterprise and competition is unlikely to be put into effect.
• Despite a fall in energy output, the economy has performed well, owing to high prices for Uzbekistan's gold and cotton exports. Business sentiment indicators point to a pick-up in industrial output in the first quarter of 2011.
• Remittance inflows from Russia rose by 39% in 2010, following a decline of almost one-third in 2009.