THE IMPACT OF THE SHADOW ECONOMY ON MACROECONOMIC STABILITY: THE CASE OF UZBEKISTAN

Authors

  • Elmurodov Shohzod Shavkatovich International School of Finance Technology and Science Institute Teacher of the Department of Management

Keywords:

shadow economy, macroeconomic stability, fiscal policy, inflation, informal employment, tax evasion, monetary transmission.

Abstract

This paper investigates the impact of the shadow economy on macroeconomic stability in Uzbekistan. The informal sector, which constitutes over one-third of GDP, poses significant challenges to fiscal and monetary policy. Using a mixed-method approach, the study analyses statistical data and policy documents from 2010 to 2024. Regression analysis reveals a negative correlation between shadow economic activity and tax revenue, inflation control, and monetary transmission effectiveness. The findings suggest that informal transactions reduce fiscal capacity and distort official economic indicators. Despite recent reforms, informal employment and cash-based trade remain prevalent. The study highlights the need for improved tax administration, digitalisation, and financial inclusion. Reducing the shadow economy is essential for enhancing macroeconomic governance and long-term development.

References

President of the Republic of Uzbekistan. (2022). Decree No. PF–60: On the Development Strategy of New Uzbekistan for 2022–2026. Retrieved from https://lex.uz/docs/5841063

Cabinet of Ministers of the Republic of Uzbekistan. (2022). Resolution No. 149: On measures to reduce the shadow economy and increase transparency in business operations. Retrieved from https://lex.uz/docs/5893325

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Center for Economic Research and Reforms. (2022). Reducing Informality in Uzbekistan: Policy Priorities. Policy Brief, March 2022. Tashkent: CERR. https://review.uz/en/post/kak-sokratit-tenevuyu-ekonomiku-v-uzbekistane

Schneider, F. (2015). Size and Development of the Shadow Economy: All Countries 2003 to 2015. Linz: Johannes Kepler University.

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Published

2025-05-31