Tajikistan: Economic Outline

Economic Indicators

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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 (+4.4% in 2020 and +9.2% in 2021). The IMF estimated growth at 7.5% in 2022, as strong financial inflows have supported domestic demand and liquidity, with positive performances being recorded in the mining, agriculture, and construction sectors. Remittances slowed immediately after the beginning of the war in Ukraine but rebounded sharply in Q2, contributing to a current account surplus and boosting foreign exchange reserves (from USD 2.5 billion at end-2021 to USD 3.4 billion in October 2022, covering more than 8 months of imports). Real GDP growth is expected to decelerate to 5% in 2023 as the positive impact of strong inflows diminishes. Over the medium-term, growth is expected to converge to its potential of around 4% (IMF).

The country has a structural budget deficit: in 2022, it was estimated at 1.4% of GDP (from 0.7% one year earlier) despite increased revenue from the mining sector, which was counterbalanced by reductions in VAT and income tax rates introduced at the beginning of 2022. The 2023 budget envisages a fiscal deficit of 2% of GDP, with a possible widening to 2.5% if external financing for capital expenditure materializes (IMF). Limited fiscal space is further constrained by infrastructure-related spending planned over the next decade. The debt-to-GDP ratio was estimated at 39.4% last year, down from 44.4% in 2021, with the main creditor being China’s Eximbank (around 40% of the total). Over the forecast horizon, the debt ratio is forecast to decline (to 40.5% this year and 39.4% in 2024). Twelve-month inflation decreased from 8% at the end-2021 to 6% in 2022, in line with the medium-term target range set by the National Bank. In fact, a strict monetary policy helped control inflationary pressures, and despite the increase in global prices of imported food and fuel during the first half of the year, a stronger somoni and the utilization of strategic food reserves have helped alleviate the rise in prices. Additionally, the robust production of local agricultural goods for internal consumption has contributed to stabilizing prices of domestic food products. The IMF forecasts an inflation rate of 7% and 6.5% in 2023 and 2024, respectively.
Overall, the private sector’s role in the economy remains limited, contributing to only 13% of formal employment and 15% of total investments (World Bank). The country’s economy is quite balanced, with agriculture representing 24% of GDP, and industry and services having a similar share (33.8% and 35.3%, respectively – World Bank).

The population is relatively poor in Tajikistan. Since independence, the country has made enormous progress in reducing poverty: between 2000 and 2021, poverty dropped from 83% to 26.5%, according to the World Bank’s latest figures. However, some 6.9 million people, including 2.8 million children, still require support due to high malnutrition rates, inadequate access to water and hygiene, disruptions to learning, exacerbated poverty and heightened protection risks. The country's GDP per capita (PPP) was estimated at USD 5,293 in 2023 by the IMF.

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: November 2023