Uzbekistan is taking steps to fortify its defence capabilities, signalling a departure from its historically peaceful stance.
The nation, nestled in Central Asia, faces mounting security challenges from neighbouring countries and also internal threats, prompting an increase in defence spending.
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According to GlobalData’s “Uzbekistan Defense Market 2023-2028″ report, Uzbekistan’s defence budget is set to rise steadily, reflecting its commitment to modernise its armed forces and tackle emerging security threats head-on.
The upward trajectory of Uzbekistan’s defence expenditure is evident, with the budget for its armed forces witnessing a Compound Annual Growth Rate (CAGR) of 2.2% from 2019 to 2023, reaching $2.67bn. This growth comes as the nation also deals with economic constraints and geopolitical complexities.
Key drivers behind Uzbekistan’s heightened defence spending include the imperative to modernise its armed forces and combat domestic terrorism. President Shavkat Mirziyoyev’s administration has prioritised military modernisation, aiming to upgrade outdated equipment and ensure combat readiness. Recent initiatives, such as integrating technologies like unmanned aerial vehicles (UAVs), exemplify this.
However, navigating Uzbekistan’s defence market poses challenges for foreign investors, chief among them being corruption and budget limitations. Transparency International’s Corruption Perceptions Index ranks Uzbekistan low, reflecting systemic challenges in ensuring fair competition and transparency in business dealings. Despite legislative reforms and anti-corruption efforts, entrenched corruption hinders investment and erodes investor confidence.
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By GlobalDataBudget constraints further complicate the investment landscape. Uzbekistan’s defence budget is projected to reach $3.03bn by 2028, growing at a CAGR of 2.6%. Efficient resource allocation becomes imperative in this context, necessitating careful consideration for prospective investors.
Amidst these challenges, the military rotorcraft sector emerges as a beacon of opportunity in Uzbekistan’s defence market. With an anticipated expenditure of $404.4m between 2023 and 2028, investment in attack helicopters holds promise. Additionally, sectors like EO/IR Systems and military unmanned aerial vehicles present attractive investment avenues, with expected expenditures of $19.4m and $9.9m, respectively, over the same period.
Recent contracts, such as Uzbekistan’s agreement with Russia to acquire MI-35M helicopters, are examples of the nation’s commitment to modernising its defence capabilities. These investments symbolise Uzbekistan’s intent to adapt to evolving security dynamics and enhance its military in the face of regional uncertainties.
While Uzbekistan’s defence landscape presents challenges, it also offers opportunities for foreign investors, particularly in high-growth sectors like military rotorcraft. Addressing systemic issues such as corruption and budget limitations will be crucial in unlocking the market’s full potential and fostering sustainable growth in the years to come.
