CPEC-BRI and Uzbekistan-Kazakhstan: A Quadrangular Partnership

2026-02-10 - 21:16

The recent visits of Uzbek President Shavkat Mirziyoyev and Kazakh President Kassym-Jomart Tokayev to Pakistan have significantly enhanced the scope, strategic importance and utility of linking CPEC and BRI in the days to come. Successfully combining these initiatives is expected to substantially boost trans-regional connectivity, socio-economic integration, infrastructure development and banking and finance cooperation, while placing the countries, their economies, communities and enterprises on the path of sustainable economic growth. Strong political will, peaceful conflict resolution, private sector participation and appropriate economic and strategic measures will be essential to achieve the ambitious goal of connecting Central Asia with South Asia. The robust economies of Uzbekistan and Kazakhstan are pivotal to the prospective integration of CPEC and BRI. The Eurasian Development Bank (EDB), in its “Macroeconomic Outlook for 2026-2028,” reviewed recent developments and projected positive trends for both nations. Uzbekistan’s economy is expected to expand by 6.8 percent in 2026, supported by strong investment activity and favourable gold prices. Inflation is projected to decline to 6.7 percent, aided by tight monetary policy and a stable exchange rate, while the average soum exchange rate is forecasted at UZS 12,800 per US dollar, supported by high remittances and rising metal exports. According to the Central Bank of Uzbekistan, economic activity in 2025 exceeded expectations, driven by resilient aggregate demand. High investment activity, fiscal spending and increasing remittances are anticipated to continue supporting income growth and stimulating consumer demand. President Mirziyoyev noted that GDP reached a record high as exports rose 23 percent and foreign investment reached €37 billion, reflecting the tangible impact of reforms. International confidence has strengthened alongside domestic growth, with rating agencies upgrading Uzbekistan’s sovereign credit rating from BB- to BB, expected to reduce external borrowing costs by up to €250 million annually. The World Bank’s Technology Readiness Index placed Uzbekistan among the global top 10, demonstrating rapid technological advancement. Uzbekistan’s economic growth has translated into measurable improvements in living standards. Electricity production rose to 85 billion kilowatt-hours, supporting over 38 million people and a growing industrial base. Irrigation infrastructure now covers 470,000 households, enabling around three million people to generate income from household plots multiple times a year. Housing construction continues at scale, with 135,000 new apartments delivered in 2025 and more than 210 million square meters of residential and non-residential space commissioned over the past nine years. A trilateral border agreement with Tajikistan and Kyrgyzstan resolved a long-standing regional issue, while strengthened EU ties through an enhanced partnership agreement positioned Uzbekistan as a platform for regional dialogue. Uzbekistan has outlined six priority directions for 2026, declared the Year of Mahalla Development and Social Prosperity, emphasizing local governance and community-level growth. More than €715 million will be allocated to strengthen entrepreneurial infrastructure in mahallas, alongside €10 billion in financing for small and medium-sized businesses, including targeted support for women and young entrepreneurs. Funding will be tied to job-creating local projects, with a focus on transparency and civic participation. Other priorities include job creation and labour market reform, expanded social protection, green development and climate resilience and reforms in public administration and the justice system. Kazakhstan’s economy is projected to grow by 5.5 percent in 2026, driven by the National Infrastructure Plan and the state program “Order for Investment,” which will mitigate the effects of lower oil prices. Growth in non-commodity exports is expected to stabilize the economy further. Inflation is forecasted at 9.7 percent by the end of 2026, following a peak due to a VAT increase and the average tenge exchange rate is projected at KZT 535 per US dollar, supported by high base interest rates and rising export revenues. Kazakhstan’s economy grew 6.5 percent year-on-year in 2025, reflecting a gradual shift from raw material exports to finished goods, signaling progress toward diversification. Industry, transport, construction and trade were key GDP drivers, with industrial production rising 7.4 percent and manufacturing growing 6.4 percent. Positive sectoral dynamics included food production (+8.1 percent), oil refining (+5.9 percent), chemicals (+9.8 percent), metallurgy (+1.2 percent) and machine building (+12.9 percent). The strong, stable and diversified economies of Uzbekistan and Kazakhstan indicate high potential for the integration of CPEC and BRI. Central Asia’s long-standing landlocked status is set to change through strategic connectivity facilitated by Pakistan’s ports. Both presidents have emphasized that sustainable prosperity in the region depends on reliable, cost-effective access to warm-water ports, elevating Uzbekistan-Kazakhstan-Pakistan relations to a strategic partnership. Pakistan is seen not merely as a bilateral partner but as a gateway to global markets via the Arabian Sea. Karachi and Gwadar are among the closest seaports to much of Central Asia, significantly reducing transportation costs, enhancing export competitiveness and attracting foreign investment in manufacturing, mining, agriculture and value-added industries. Connectivity is further enhanced through China-Uzbekistan-Kyrgyzstan and China-Kazakhstan railway systems via the Dostyk-Alashankou corridor. The proposed Karachi-Haripur-KKH-China-Kazakhstan corridor exemplifies this shift, built on economic rationale, logistics efficiency and mutual trust. The writer recommends the establishment of a trilateral maritime transport company comprising Uzbekistan, Kazakhstan and Pakistan to strengthen trans-regional trade, with funding sought from private sector participation. Policymakers should also consider the Gwadar-Kashgar-Khorgor Middle Corridor as an alternative route bypassing Afghanistan. Additionally, forming a trilateral commercial cargo company could further enhance trilateral trade and connectivity in the region. In conclusion, the recent presidential visits have created a historic opportunity to integrate CPEC and BRI, unlocking new avenues for economic development, regional stability and sustainable prosperity in Central and South Asia. Through strategic foresight, enhanced connectivity and collaboration, Uzbekistan, Kazakhstan and Pakistan can establish a quadrangular partnership that strengthens trade, infrastructure and industrial growth while ensuring long-term regional integration and access to global markets. (mehmoodulhassankhan7@gmail.com)