A suite of measures designed to ensure the achievement of the major priorities identified by the President Islam Karimov of the Republic of Uzbekistan for intensification of economic reforms in 2012 served their purpose well: in the first six months of the current year, a high rate of economic growth was attained, the balanced development of all sectors of the national economy ensured and a solid foundation on which to preserve the stable growth dynamics of its major macroeconomic indicators created.

I. Major macroeconomic indicators

In the first half of the current year, production of GDP grew by 8.1 per cent, with the spectacular pace of economic growth being accompanied by a further reinforcement of the country\'s macroeconomic stability, which is characterized by a low level of inflation (3.4 per cent), positive balance of the state budget (0.2 per cent to GDP) and the positive foreign trade balance of Uzbekistan (over US $1.2 billion).

Implementation of the approved measures, whose aim was to facilitate the development of the manufacturing sector, to improve the Uzbek economy\'s overall competitiveness and to ensure the production of new commodity categories, resulted in a 7 per cent rise in the volume of industrial production. At the same time, acceleration of technical renovation processes in agricultural production and introduction of advanced technologies facilitated a 7 per cent increase in the volume of farm produce in the Republic of Uzbekistan,

Realization of steps intended to stimulate home demand and to prop up the development of domestic manufacturers of goods and services led to a rise in the production volume of consumer commodities by 7.7 per cent, localized output - by 25.7 per cent, retail commodity turnover - by 12.5 per cent and services -. by 14 per cent, including paid services -by 16.2 per cent.

As for the measures aimed at giving an impetus to the development of investment activity in domestic enterprises, including the additional privileges and preferences granted to foreign investors, they were highly subservient to raising the volumes of investment and contractual construction works by 7.6 per cent and 8.6 per cent, correspondingly. Major indicators of socio-economic development in the Republic of Uzbekistan in the first half of 2012 (as a percentage of the similar period in 2011)

II. Increasing the level of the national economy\'s compe¬titiveness and intensifying the processes of restructuring and diversification in the Uzbek economy

In a move to ensure that the major parameters set in the country\'s 2012 Socio-Economic Development Program are implemented on an unconditional basis, a range of program measures was elaborated and approved in the period under review, All of them are designed to improve the Uzbek economy\'s competitiveness in foreign markets by reducing production costs and prime costs of output, intensifying the processes of localization and technical and technological modernization of production facilities, and incentivizing local enterprises to expand their export deliveries of competitive goods.

Under the Program for Development Priorities in Manufacturing in the Republic of Uzbekistan for 2011-2015, all structural reforms in the sector were given a boost in the first six months of the current year.

The most dynamic growth in the period under review was observed in the following sectors: the light industry (112.9 per cent on the comparable period of 2011), mechanical engineering and metal-working (108.3 per cent), food (108 per cent), production of building materials (106.5 per cent), chemicals and petro-chemistry (105.2 per cent).

Successful realization of measures to make the manufacturing sectors much more competitive allowed the country to substantially swell, in the first half of 2012, the production of cars, lorries and buses, automobile glass, air-conditioners, electric irons, energy-saving electric light bulbs, steel and steel pipes, rolled metal, mineral fertilizer, sulphuric acid, cellulose, dry construction mixtures, laminated plates, medicines and other product groups with high added value. In the period under review, more than 190 billion Soum (official exchange rate 1 USD=1904,90 UZS) worth of goods and services was turned out, making wide use of innovation technologies, under the contracts concluded in the course of the Republican Fair of Innovation Ideas, Technologies and Projects.

Contributive to the increase in the level of competitiveness of the nation\'s manufacturing industries was an 11.1 per cent decline in the output\'s prime cost at the big enterprises, which was achieved by saving energy resources, rationalizing technological processes and norms of raw-material expenditure as well as by reducing other expenses.

Within the framework of the Localization Program, domestic enterprises manufactured 3892.3 billion Soum worth of produce in the first half of the current year, up 25-7 per cent on the same period a year earlier. Production of over 170 new categories of goods was launched, including internal-combustion engines, signal-block moisture-proof cables, 6-meter-wide graders, crystalline sodium sulphocyanate, GRAT-700 pumps, welding flux, air-conditioned passenger carriages, DSLAM telecommunications equipment, ADSL modems and others. As a result, the estimated effect of import-substitution came to US $2.1 billion, with the share of exports in the total volume of localized produce growing from 24.7 per cent to 25.3 per cent.

Following the realization of the Program for Raising Industrial Potential of the Regions, the first half of 2012 saw a 7.7 per cent rise in the production of consumer goods, including foodstuffs, - by 9-3 per cent and non-food commodities - by 6.4 per cent.

A sizable increase was attained in production volumes of hosiery, leather goods, carpets, enameled ware, tinned meat, canned fish, tinned fruit-and-vegetables, butter, dried milk mixtures for baby\'s bottle-feeding and the like. Indigenous manufacturers mastered the production of new types of washing machines, microwave stoves, gas-stoves, vacuum cleaners, as well as 32 types of new medicines.Stimulating the expansion of export potential in different economic sectors and regions of Uzbekistan, in keeping with the measures identified by the Uzbek leader, in the first six months of 2012 many new product categories were exported from the Republic. These include Lan-cables, energy-saving electric light bulbs, lorries, attachments for automobiles, children\'s bicycles and toys, children\'s sport wear, men\'s suits, outer-clothes, ceramic tiles, acetous acetaldehyde, unifloc, nitric-phosphoric-potash fertilizers, rolled netting etc.

The total turnover at stock-exchange and exhibition-fair auctions in the indicated period grew by 8.8 per cent. Larger volumes or furnace mazut, technical sulphur, metal zinc, mineral fertilizers and polyethylene were sold at the stock-exchange auctions. Deals concluded there by small businesses accounted for 53-5 per cent of the total stock-exchange turnover.

The steps taken in Uzbekistan with a view to augmenting the volume of credit given to the services sector and encouraging the development of individual entrepreneurship there by granting additional privileges and incentives led to a 14 per cent increase in the volume of services, with the proportion of paid services going up by 16.2 per cent. The share of services in GDP, as a result, reached 52.2 per cent, compared with 43.3 per cent in the similar period of 2011. Among the services that developed most dynamically in the first half of the current year were communications and information technology (up 26.9 per cent on the same period a year earlier), tourism (22.8 per cent), consumer services (22.6 per cent) and financial services (16 percent).

Following the implementation of measures to expand the resource base of the nation\'s banking system and to boost the local banks\' investment activity, the aggregate capital of the banking system, as of July 1st 2012, increased by 24.2 per cent, compared with the same period of the previous year, with the aggregate bank assets and attracted customer deposits growing, respectively, by 30.3 per cent and 30.5 per cent.

III. Speeding up the processes of modernization and technological upgrading of existing production facilities

The total volume of investments implemented in the Uzbek economy in the first half of the current year amounted to 9979.6 billion Soum, having grown by 7.6 per cent in comparable prices. Compared with the similar period of 2011, the volumes of capital investments made by enterprises out of their own funds increased 1.3-fold, credits from the Foundation for Reconstruction and Development of Uzbekistan - 1.5-fold, the Foundation for Reconstruction, Major Repairs and Equipment of Educational and Medical Establishments - 5.2-fold and the Foundation for Children\'s Sport Development - 1.3 times as much.

As the resource base of commercial banks grew, so did the volume of loans they extended to enterprises operating in the real economic sector (a 1.3-fold rise).

At me same time, me volume or long-term credits, for the term of more than one year, also swelled by 30.5 per cent. Credits to the tune of 2.6 trillion Soum (up 1.3 times as much) were given to projects such as modernization and technical and technological re-equipment of enterprises.

In an attempt to create the most propitious investment environment for overseas investors that make direct investments in the development of high-tech production facilities, a number of additional measures were approved by the Presidential Decree No ÓÏ-4434 dated April 10th 2012, to stimulate the attraction of foreign direct investments, above all to the Republic\'s regions, through the strengthening of the system of guarantees and privileges for foreign investors and enterprises set up with a share of foreign capital. As a whole, the volume of foreign investments and credits in the period under review exceeded US $1 billion, of which over 80 per cent was accounted for by FDI.

In the first half of the current year, 46 projects, included in the 2012 Investment Program of the Republic of Uzbekistan, were brought to completion. Among them are the following projects: \"Creation of a new complex for the production of lorries and parts in Samarkand province (II stage -assembly facilities)\"; \"Expansion and reconstruction of the Kalmakir mine\"; \"Organization of the production of calcium unserviced batteries\"; \"Organization of the production of radiators, air-conditioning, ventilation and heating systems\", \"Organization of the production of technological attachments, dies and casting moulds\"; \"Organization of the production of automobile parts\", \"Organization of spinning production at the FE Osborn Textile\"; \"Modernization of OOO Bukhoro Energo Textile\"; \"Reconstruction of the passenger terminal at Navoi airport\"; \"Reconstruction of the Kuyu-Mazar 220 kW sub-station\"; \"Construction of the Ishtykhan 220kW sub-station with VL 220 kW and the Gornorudnaya 110 W sub-station with VL 110 kW\" and other projects.

All in all, more than 530 production facilities were put into operation countrywide in the first half of 2012. They cover sectors as diverse as the light industry, food, chemicals, woodworking, building materials, machinery construction etc.

In the period under review, enterprises operating on the territory of the Navoi Free Industrial-Economic Zone manufactured produce worth 25.1 billion Soum. The realization of the project \"Organization of the production of accumulating wires on the basis of UzIsraeCableJV\" was finalized in the indicated period.

Work was continued in the first half of 2012 on technical and technological upgrading of agriculture and provision of farmers with every kind of support and assistance. In particular, 546 units of agricultural equipment were supplied on a leasing basis, including TL-100, Arion-630C and TS-135 tractors, transport and prow-crop tractors, and Dominator-130 combine harvesters.

As many as 7,400 kilometers of inter- and intra-farm water-collection-drainage networks, 8 land-improvement pumping stations and 391 land-improvement wells were reconstructed under the Irrigated Land Land-Reclamation Program. Other reconstruction projects included 43-4 kilometers of manifolds, 81 vertical-drainage wells and 8.39 kilometers of covered water-collection-drainage networks.

New gardens were laid out on the 7,600 ha area, including intensive gardens (2,600 ha) and vineyards (3,800 ha). In addition, 8,500 ha of gardens and 6,000 ha of vineyards were subject to reconstruction. 9,456 hothouses covering 266.8 ha were built on the territory of subsidiary small¬holdings. In a move to expand the material-technical base for the storage of fruit and vegetables, 22 new refrigerating chambers, with total capacity of 6,300 tons, were put into service in the period under review. Besides, 3 existing refrigerating facilities (2,000 tons) were upgraded.

As a result of measures taken in the first six months of the current year, domestic farmers achieved rich harvests of vegetables (1917.2 thou tons, or 114.5 per cent on the corresponding period of 2011), potatoes (938.8 thou tons, or 112.5 per cent), melons, water-melons and gourds (120.9 thou tons, or 112.2 per cent), fruit and berries (642.8 thou tons, or 110.4 per cent), and grapes (17.6 thou tons, or 112.5 per cent). As for the volume of processed fruit and vegetables, it also grew, by 11.7 per cent.

For the purpose of developing livestock farming, 406 cattle-breeding farms were set up in the period under review, which are capable of rearing 11.8 thou heads of cattle. Moreover, 336 poultry farms, 333 bee-keeping farms and 359 fish-breeding farms (342 of which use man-made water reservoirs) were also created in that period. Commercial banks extended loans to the tune of 38.6 billion Soum with a view to helping dekhkan establishments, farms and subsidiary small-holdings to purchase livestock.

Taking all the newly bought livestock into account, the total number of cattle increased by 6.2 per cent, reaching 9783.3 thou heads. The production volume of meat and milk in the first six months of 2012 grew by 7 per cent, from the same period a year earlier. As many as 1936.2 million eggs were also produced, 16.8 per cent above the 2011 figure.

IV. Outstripping development of infrastructure and transport and communication construction

During the first half of the current year work was continued on many road-construction projects included in the 2012 Investment Program. In particular, 153.3 kilometers of roads for genera! use were built, of which 126.3 kilometers have asphalt-concrete road surfacing and 27 kilometers represent two-way cement-concrete roads.

Under the Program \"On acceleration of the development of infrastructure and transport and communication construction for the period 2011-2015\", 115 kilometers of railway tracks were rehabilitated in the period under review. Besides, the sector produced 225 goods vans and 10 passenger carriages and bought 1 passenger locomotive.

The National Air Company started exploiting 2 new Boeing-767-300ER airliners. General construction works and laying of internal engineering networks were completed under a project to reconstruct Navoi Airport\'s passenger terminal. The implementation of measures to ensure the efficient performance of ZAO Angren Logistics Center contributed to a 1.3-fold rise in the volume of goods traffic via the Kamchik pass. As a result, freight and passenger turnover of the Republic\'s railway transport swelled in the first half of the current year by 4.1 per cent and 15.3 per cent, correspondingly, on the similar period of 2011. The volume of passenger transportation by air grew by 17.6 per cent and the average passenger loading per flight -by 13 per cent.

In the period under review, work was continued on the further improvement of the population\'s access to quality drinking water. For this purpose, 980.9 kilometers of water-supply networks was commissioned across the Republic, including 865 kilometers in the countryside. 158.3 km-long water mains were upgraded in 143 rural populated areas.

In order to expand the resource base for the housing-construction industry, 101 new facilities were created to produce building materials from local raw stuff and components. Those located in Kashkadarya and Syrdarya provinces turn out 20,000 ñ m. of modern foam concrete articles. Other production facilities manufacture lamination substance (72,000 ñ. ò., Tashkent province) and cement (70,000 tons, Ferghana province). Among them are also 11 brickworks, with total production capacity of 47.9 million bricks. Besides that, 12 existing enterprises specializing in the production of burnt bricks were modernized.

V. Accelerated development of small business and private entrepreneurship and creation of the most auspicious business environment

The implementation of complex measures to improve the business environment and to facilitate the development of small business and private entrepreneurship resulted in the creation in the first half of 2012 of 13,000 new small businesses (excluding farms). Let it be mentioned in this connection that the bulk of them (64.6 per cent) was established in production sectors.

35 state-owned assets to the tune of 6.3 billion Soum were sold and some 14,000 unused state-owned installations leased to local farmers with the purpose of encouraging them to organize small and privately-run enterprises. At the same time, commercial banks allotted credits and micro-credits to small businesses and private entrepreneurs, whose total amount is 1.4 times above that extended in the comparable period of 2011.

From the beginning of the current year, the volume of state purchases from indigenous small businesses is estimated to reach 122.3 billion Soum, or 92 per cent of the overall volume of state purchases made via e-auctions. Upwards of 132.200 small businesses put their goods and services on sale there.

As a result of measures implemented throughout the Republic to stimulate the export of produce manufactured by small enterprises, in the period under review the latter exported US $1087-5 million worth of goods and services, or 14.1 per cent higher than the 2011 level.

By and large, the realization of measures designed to speed up the development of small business and private entrepreneurship entailed an increase in the share of different sectors in GDP: small business - up to 42.6 per cent (against 42.2 per cent in the first six months of 2011), manufacturing - up to 21.2 per cent (18.6 per cent), investment - up to 35.4 per cent (30.3 per cent), construction - up to 75-1 per cent (70 per cent), exports - up to 15.2 per cent (13.5 per cent) and employment - up to 74.7 per cent (74.1 percent).

VI. Job placement and consistent increase in the population\'s income level

Within the framework of the Program for Job Creation, in the first six months of 2012 a total of 510,500 new jobs were created nationwide. Of these, 345,000 jobs (or 67.6 per cent) were created in rural areas, including 62,700 - in 28 labour-excessive regions.

While realizing a set of complex measures to place college graduates in jobs, 501,500 students graduating from colleges in the 2011-2012 academic year were assigned to 92,900 enterprises and organizations under the \"college -enterprise system\". Trilateral agreements were signed with another 97,300 graduates, which stipulate that the latter would do practical work and undergo industrial training, with the subsequent placement in jobs, at concrete enterprises and organizations.

In the course of realization of the State Program \"The Year of Family\", in the period under review several legislative and regulatory documents were elaborated and passed, in a bid to stimulate the development of family entrepreneurship in various sectors of the national economy, to strengthen the social backing of young families as well as to improve their social and living conditions. The Law of the Republic of Uzbekistan, \"On family entrepreneurship\" approved by Oliy Majlis specifies the legal rights, obligations, labour relationships and forms of state support provided to family enterprises. The Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, \"On additional measures to ensure the social backing of young families\" approves a program for construction and reconstruction of tenement-houses in towns, district centers and town-type settlements in 2012-2013.

More than 14 billion Soum worth of consumer and mortgage credits on preferential terms and micro-credits needed to organize entrepreneurial activity were given to young families in the first six months of the current year, The total amount of funds from all sources of financing that were allotted in the period under review to ensure the realization of the Year of Family Program exceeded 1.1 trillion Soum.

The stimulating effect on an increase in the population\'s income level was also produced by measures to reduce the rates of fixed tax on individual entrepreneurs, as well as to eliminate the zero grade in the Labour-Pay Unified Tariff Scale, establishing instead the size of labour pay in all the Republic\'s organizations on a level with the 1st grade. As a consequence, the average monthly wage grew by 19.4 per cent in the period under review, which, in turn, eventuated in a 26.1 per cent rise in the population\'s aggregate income.

The consistent and purpose-oriented materialization of the 2012 Economic Program\'s major parameters, combined with the prompt taking of action to mitigate and neutralize the consequences of the ongoing crisis processes in the world economy, allowed the Republic of Uzbekistan to sustain the high and stable pace of economic growth in the first half of the current year and to further reinforce its macroeconomic stability.

Among the main tasks designed to ensure the sustainable development of the Uzbek economy in 2012 are the intensification and expansion of the scope of reforms, acceleration of modernization processes across all sectors of the national economy and creation of the most favourable business environment and investment climate that are expected to raise the latter\'s competitiveness as well as to increase the population\'s employment and income levels.

Ministry of Economy of the Republic of Uzbekistan

State Statistics Committee of the Republic of Uzbekistan

(Source: “BusinessPartner.Uz” newspaper)