Reported growth slowed to 6.0% and trade declined in Tajikistan, reflecting lower commodity prices, weak private investment, and remittance shortfalls. Growth is projected to fall to 3.8% in 2016 as recession continues in the Russian Federation and activity remains weak in other trading partners, then recover slightly to 4.0% in 2017. A better business environment would boost local production and employment, alleviating excessive dependence on remittances.
|Selected economic indicators (%) – Tajikistan||2015||2016 Forecast||2017 Forecast|
|Current Account Balance (share of GDP)||-5.9||-4.8||-5.5|
Source: Asian Development Outlook 2016
Growth decelerated to 6.0% in 2015 from 6.7% a year earlier as recession in the Russian Federation and a plunge in the ruble caused remittances, Tajikistan’s main source of income, to fall by a third. About 135,000 Tajik migrant workers returned home as a result of tightened immigration control in the Russian Federation. Other constraints on growth were lower prices for primary Tajik exports aluminum and cotton, weak private investment, and the depreciation of the Tajik somoni by nearly a third.
On the supply side, a 21.2% rise in construction fueled by public investment was the main driver, offsetting a 7.0% decline in services due mainly to the drop in remittances. Growth in industry slowed to 11.2% from 13.3% in 2014 despite significant gains in electricity generation and mining. Growth in agriculture slowed to 3.2% from 4.5% in 2014 as late spring frosts reduced exports of dried fruit.
On the demand side, low remittances and currency depreciation constrained private consumption. Higher investment from the People’s Republic of China (PRC) partly offset lower private consumption.
Growth is forecast to slow to 3.8% in 2016, reflecting the continuing recession in the Russian Federation, before recovering to 4.0% in 2017 with some recovery in the external outlook. Second-round effects of developments in 2015, along with weaker economic performance in Tajikistan’s other main trade partners (the PRC, Kazakhstan, and Turkey) and continued low global commodity prices, will limit remittances and foreign investment, constraining demand and consumption in 2016. Expected recovery in the Russian Federation and better performance in other regional partners in 2017 should improve growth prospects.
Read more from Asian Development Outlook 2016.