Uzbekistan’s unobserved economy reached $21.2 billion in the first half of 2025, representing 32.9% of the country’s total gross domestic product, according to data released by the National Statistics Committee. This figure marks a notable improvement from 2024, when the shadow sector accounted for 34.8% of GDP, demonstrating the government’s ongoing efforts to bring economic activity into the legal framework.
The unobserved economy encompasses two distinct categories: informal economic activity conducted by households and businesses operating without proper registration, which totaled approximately $16 billion, and shadow economy activities by enterprises concealing information from tax authorities to evade payments, accounting for $5.1 billion. The agricultural sector emerges as the most problematic area, with over 75% of companies and entrepreneurs operating outside legal frameworks, followed by construction at 35.9% and services at 35.2%.
Government intensifies anti-shadow economy campaign
The country’s leadership has launched a comprehensive offensive against informal economic practices. During 2024, the Prosecutor General’s Office successfully “brought out of the shadows” and collected nearly $1.2 billion for the state treasury, while legalizing more than 15,000 jobs and legitimizing the activities of 9,000 entrepreneurs. The Tax Committee has set an ambitious target to halve the shadow economy by 2030, with expectations that the 2025 budget will receive an additional $1.6 billion through these legalization efforts.
President Shavkat Mirziyoyev recently reviewed a comprehensive presentation on improving the system for combating the shadow economy, acknowledging that previous excessive administrative pressure and bureaucratic interference had forced many businesses underground. The government’s response has been systematic: reducing the number of tax types from 13 to 9 and eliminating over 100 types of licenses and permits. These reforms have already yielded results, with the shadow economy’s share dropping from 45-50% in 2019 to approximately 35% in 2024.
Digital transformation as key weapon against informality
The administration is now pivoting toward technological solutions to address remaining challenges. New automated payment systems are being introduced across agriculture, services, trade, and construction — sectors with the highest concentration of shadow activities. The initiative aims to completely digitize licensing and permit processes, minimizing human involvement and reducing corruption opportunities in tax, banking, customs, municipal, and certification services.
“The task is set to review the procedure and timing of issuing licenses and permits, minimize the human factor to the maximum and completely transfer these processes to digital format,” according to the presidential press service. The government is also promoting cashless payments and expanding the number of payment system operators as effective tools for reducing the shadow sector.
Mirziyoyev emphasized that combating the shadow economy requires more than increased control measures. “Tax culture should become a matter of the whole society. The honesty traditional for the Uzbek people ultimately ensures prosperity and wealth in all spheres of life,” he stated, highlighting the need for individual approaches to each sector and creating conditions where transparent, legal entrepreneurship becomes profitable.
Implications for international business expansion
These developments present significant opportunities for international companies considering market entry or expansion in Uzbekistan. The government’s systematic approach to formalizing the economy creates a more predictable and transparent business environment, particularly beneficial for foreign manufacturers and construction companies seeking reliable local partners and suppliers. The digitalization of administrative processes reduces bureaucratic obstacles that have historically complicated foreign investment procedures.
For international construction and manufacturing firms, the formalization of Uzbekistan’s building sector — where over one-third of activity remains informal — opens pathways for legitimate partnerships and supply chain relationships. The government’s commitment to reducing regulatory burden while maintaining compliance standards creates favorable conditions for technology transfer, joint ventures, and direct investment. Foreign companies can expect increasingly standardized business practices, improved contract enforcement, and better protection of intellectual property rights as the shadow economy continues to shrink and formal business structures strengthen.
