Tashkent, Uzbekistan (UzDaily.com) — The Institute for Macroeconomic and Regional Studies (IMRI) has assessed the level of diversification in Uzbekistan’s textile exports, focusing on both product and market diversification.

The Herfindahl-Hirschman Index (HHI) was used for this evaluation. According to the HHI, the level of diversification is categorized into three groups:

- High diversification (0-1500);

- Medium diversification (1500-2500);

- Low diversification (2500-10000).

Export Dynamics: Between 2016 and 2023, the volume of textile exports doubled, reaching US$3.2 billion in 2023. The textile industry’s share in the country’s total exports rose from 13.1% in 2016 to 18.9% in 2021. However, despite a 4.2% growth in 2022 and a 0.6% increase in 2023, the sector’s share in total exports dropped to 17% in 2022 and 13% in 2023.

Product Diversification: The export diversification of textile goods improved each year, with the HHI dropping from 2668 in 2016 to 1648 in 2023, moving from a poorly diversified to a moderately diversified market. This shift reflects a transition from raw material exports to products with added value.

The export of cotton fiber decreased dramatically from US$637 million in 2016 to just US$70,000 in 2023. Cotton yarn’s share in total textile exports also fell from 51.1% in 2021 to 37.9% in 2023. Concurrently, the share of finished products, such as knitted fabrics and garments, increased significantly over this period.

Country Diversification: Despite improvements in product diversification, country diversification decreased. The HHI for export destinations rose from 1606 in 2016 to 2435 in 2023, primarily due to an increased concentration of exports to Russia, whose share grew from 29% to 45% during this period. In addition to Russia, other key markets in 2023 included China (13.7%), Turkey (10.4%), Kyrgyzstan (7.8%), and Iran (3.2%).

GSP+ Membership and EU Export Growth: Since Uzbekistan obtained GSP+ status in 2021, textile exports to the EU surged from US$76.4 million in 2020 to US$178.5 million in 2022. However, in 2023, exports to the EU dropped by 14% to US$152.8 million, highlighting the need for further improvements in product quality to meet EU demand and to explore new markets.

This analysis underscores the importance of continued efforts to enhance both product and market diversification in Uzbekistan’s textile industry, while also boosting the production of value-added goods.