Tajikistan Economic Update, Fall 2015

Abstract

Tajikistan’s economy exceeded
 expectations during the first six months of 2015 despite a
 challenging external environment. According to official
 data, GDP growth slowed only moderately from 6.7 percent in
 the first half of 2014 to 6.4 percent year on year (y/y) in
 the first half of 2015, even as remittances from Russia
 fell, global demand weakened, and prices for the country’s
 key export commodities such as aluminum and cotton dropped
 significantly. Domestic factors continued to drive growth,
 and both the construction and industrial sectors expanded as
 the economy’s focus shifted from consumption to investment.
 The state budget surplus reached 1 percent of GDP, and the
 external public debt to GDP ratio dropped to below 20
 percent. The sharp decline in remittances is limiting the
 growth of household consumption and could threaten the
 sustainability of recent gains in poverty reduction and
 shared prosperity. According to the National Bank of
 Tajikistan (NBT), remittances dropped by 32 percent (y/y),
 in US dollar terms during the first six months of 2015.
 Although the decline was less dramatic (about 18 percent) in
 Tajikistan somoni (TJS) terms, income losses were much
 larger than implied by GDP statistics. Falling remittances,
 limited employment creation outside the public sector, and
 rising prices are slowing the rate of poverty reduction.
 Moreover, the lack of well-targeted social programs leaves
 households vulnerable to economic shocks.