Tajikistan: Economic Outline

Economic Indicators

Tajikistan is a lower-middle-income, mountainous country with an economy based mainly on mineral extraction, metal processing, agriculture, and the remittances of citizens working abroad. The last twenty years saw steady growth, and although at a slower pace, the economy continued to grow even amid the global COVID-19 crisis. Tajikistan's economy expanded by 8.3% in 2023, buoyed by increased domestic demand fueled by remittances and exports of precious metals. The growth was widespread across various sectors, with agriculture leading the expansion, followed by industry, construction, and services. The economy is anticipated to grow at a rate of 6.5% in 2024, driven by private consumption, buoyed by Russia's robust demand for labor migrants, along with sustained growth in domestic real wages and increased public spending on infrastructure. However, the surge in gold exports witnessed in 2023 is projected to diminish due to a high base effect (data World Bank).

The 2023 budget deficit is estimated at 1.4% of GDP, similar to 2022. Enhanced economic activity and improved tax administration resulted in an increase in tax receipts from 18.5% in 2022 to 19.2% of GDP in 2023. Budget expenditures rose from 28.5% of GDP to 30.8%, driven by investments in energy, education, and communication sectors. The fiscal deficit is projected to be limited to 2.5% of GDP in the medium term. A revised medium-term revenue plan aims to enhance tax collection by gradually eliminating inefficient tax exemptions. Consumer price inflation remained moderate at 3.7% on average in 2023. This was supported by controlled depreciation of the local currency, administrative price controls, strong agricultural output, and declining fuel prices. The central bank progressively eased monetary policy, reducing the policy rate from 13% to 10% in 2023, further to 9.5% in February 2024. Inflation is forecasted to stay within the target range of 4 to 8% in 2024. Tajikistan's potential continues to be hampered by obstacles to market competition, weak institutional frameworks, and limited human capital. Productivity remains low, and the private sector struggles to generate employment opportunities. The country heavily relies on labor migration, mainly to Russia, and the export of natural resources, particularly metals and minerals, which constitute two-thirds of its total exports. In the short and medium term, the government's priorities include dismantling barriers to foster a dynamic private sector, enhancing transparency and accountability within the public sector to improve service delivery, including in state-owned enterprises (SOEs), and implementing measures to promote inclusive growth and bolster resilience to climate-related shocks.

Tajikistan retains its status as the poorest country in the ECA region, boasting a GNI per capita of USD 1,210 in 2022, with 10.7% of households residing below the lower-middle-income poverty line in 2023 (World Bank). The unemployment rate registered a marginal decrease in 2022, standing at 6.9% (from 7% one year earlier), as per the World Bank. Tajikistan's economic prospects face numerous risks. These encompass geopolitical instability, slower-than-anticipated global economic growth, tightening financial circumstances, substantial contingent liabilities within the SOE sector, and sluggish progress in structural reforms. Furthermore, Tajikistan's susceptibility to climate change and natural calamities adds another layer of vulnerability to its economic stability.

Monetary Indicators	2016	2017	2018	2019	2020
Tajikistan Somoni (TJS) - Average Annual Exchange Rate For 1 GHS	1.96	1.97	2.00	1.83	1.84

Source: World Bank - Latest available data.

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Latest Update: May 2024