Obid Khakimov: the concept of GDP per capita should not be confused with income of the population
Tashkent, Uzbekistan (UzDaily.com) -- Director of the Center for Economic Research and Reforms (CERR) Obid Khakimov explained the President’s statement on increasing per capita income to US$4,000.
On 13 September 2021, a press conference was held at the Agency for Information and Mass Communications (AIMK), dedicated to the financial and economic policy carried out in Uzbekistan.
The event was attended by Director of the Center for Economic Research and Reforms Obid Khakimov, First Deputy Minister of Economic Development and Poverty Reduction Ilkhom Norkulov, Deputy Chairman of the Central Bank of Uzbekistan Behzod Khamraev, Deputy Minister of Finance Akhadbek Khaidarov, Director of the Institute for Forecasting and Macroeconomic Research Umid Abidkhodjaev.
Over the past four years, a lot of work has been done in Uzbekistan aimed at accelerated socio-economic development and liberalization of the country’s economy, creating a completely new investment and business climate, and further integrating the country’s economy into the world community.
In particular, in 2017-2020, the growth rate of the country’s economy amounted to 18.3%, and the GDP reached US$60 billion. The foreign trade turnover in 2016 amounted to US$24 billion and US$36 billion in 2020. The volume of industrial production amounted to 369 trillion soums, which is 23.4% more in nominal terms than in 2016. As a result, the share of industrial production in GDP increased from 19.5% to 27.4%.
At a press conference, the head of CERR spoke about what needs to be taken into account in economic growth and GDP growth trends.
- Our economy has undergone large-scale structural changes in the past 5 years. We can say that the share of industry in GDP increased from 19% to 27%, while the share of agriculture decreased to 30% of GDP, that is, to 25%.
This means that over these 5 years there has been a transition to resource-efficient agricultural sectors in the economy, and in industries with high economic efficiency.
In the next 5 years, our economy should determine the direction of its development, taking into account the changes not only in Uzbekistan, but also in Central Asia, as well as taking into account the trends in the world economy as a whole.
Firstly, 35 million people live in the country, and by 2026 the population will reach 38 million. This is a trend of economic growth not only in Uzbekistan, but also in each of our neighboring countries, be it Kazakhstan or Kyrgyzstan.
On the one hand, there are trends in population growth, on the other hand, as the labor force grows, which in turn will require more efforts to provide them with jobs and improve their well-being.
Currently, there are about 14 million people on the labor market of the Republic of Uzbekistan, and about 600 thousand new human resources are supplied annually. We need to provide them with jobs with high productivity and decent wages.
One of the biggest trends we are seeing around the world right now is that we cannot secure future competitiveness unless we take action to drive knowledge-based economic growth rather than growth through a larger workforce. and capital in the process of economic growth.
It is also worth noting the current shortage of water and energy resources in the region. This deficit is also one of the factors affecting the economic development of Uzbekistan. According to forecasts, in 2050, water shortages in the Amu Darya-Syrdarya may reduce the efficiency of agriculture and, in addition, have a sharp impact on the GDP of all countries in the region.
Taking into account all these factors, as the President said at the congress of the Liberal Democratic Party of Uzbekistan, the country faces the task of increasing GDP per capita by 1.6 times in the next five years.
“By 2030, we will be able to increase per capita income to US$4,000 and create a solid foundation for becoming one of the upper middle-income economies. Of course, this is not an easy task. To achieve this, we must, first of all, radically change labor efficiency through the creation of new technologies and value chains through development based on science and innovation in the economy," Shavkat Mirziyoyev said earlier.
Now in Uzbekistan, GDP per capita is about US$1750. The average monthly salary is 2.6 million soums, in Tashkent - 4.2 million soums. There is a difference between them.
The CERR director explained the difference between GDP and per capita income.
“However, some Uzbeks thought that we were talking about the income of the population as a whole.
The concept of GDP per capita should not be confused with the income of the population.
Many people have questions and misunderstandings. In this regard, I must say one thing - by GDP we mean the aggregate market value of all goods and services created within the country in 1 year.
For example, if we create a GDP of US$60 billion in the country, then part of it is people’s wages, the other part is the share of equipment owners. And the factors involved in each individual production contribute. This means that when calculating, we divide the GDP by the population and get the sum of the GDP per capita. GDP in Uzbekistan is now about US$1,750 at par.
With a GDP per capita of US$4,000 by 2030, we will be ranked among the upper middle income countries by international standards. According to international standards, countries with GDP per capita up to US$1000 are classified as low-income countries, from US$1000 to US$4000 - countries with lower middle income, from US$4000 and above - countries with medium-high, and countries where GDP is above US$10,000 classified as high income countries.