From 2016 to 2023, Tajikistan maintained robust growth, peaking at 9.4% in 2021. However, a downturn is projected in 2024 with a growth of 6.5%, further declining to 4.5% in 2025, as per the IMF's "April 2024 Regional Economic Outlook: Middle East and Central Asia" report.
In terms of nominal GDP, Tajikistan has shown a steady increase from $8.9 bn in 2021 to $11.9 bn in 2023. Projections for 2024 and 2025 further suggest a rise to $13 bn and $14.1 bn respectively. This growth can be linked to the country’s strong economic performance and higher wages, which helped reduce poverty.
Consumer price inflation in Tajikistan was on a downward trend, falling from 9% in 2021 to 3.7% in 2023. However, projections for 2024 and 2025 show an increase of 4.9% and 6.3% respectively. This could be due to rising global demand for fuel and food, and supply chain bottlenecks exerting upward pressure on import prices.
The general government fiscal balance as a percentage of GDP remained relatively stable, hovering around 24% from 2021 to 2023. Projections for 2024 and 2025 suggest a slight decrease to 23.7% and an increase to 25.2% respectively. This could be due to the government’s budgetary consolidation efforts and the expiration of COVID-19-related fiscal relief.
Tajikistan’s total gross external debt as a percentage of GDP saw a slight increase from 63.2% in 2021 to 64.7% in 2023. Projections for 2024 and 2025 suggest a further increase to 65% and a decrease to 64.3% respectively. Despite the sustainability of public debt, the risk of debt distress remains high due to upcoming repayments of Eurobonds.
The potential reasons behind this are:
Weaker remittances: Tajikistan’s economy is significantly dependent on remittances, primarily from Tajik nationals working abroad. Any decrease in these remittances can impact the country’s GDP growth.
Fiscal space constraints: Limited fiscal space could restrict the government’s ability to invest in public services and infrastructure, which could slow down economic growth.
Subdued global demand for major export commodities: If the global demand for Tajikistan’s major export commodities decreases, it could negatively impact the country’s export earnings and thus its GDP growth.
Climate challenges and risks: Tajikistan faces significant climate challenges and risks that could lead to irreversible economic, social, and environmental damage. For instance, the country has lost an estimated 20% of its glaciers in the past 34 years, posing a major threat to the economy as it is heavily dependent on glacier-fed rivers for hydropower generation.
Inflation: Inflation in Tajikistan is projected to reach 5.5% in 2024 and 6.5% in 2025. The increase in inflation is due to anticipated higher lending as deposits increase; a 40% rise in pensions, stipends, and public sector salaries which became effective on January 1, 2024; and a 16% increase in electricity tariffs which also came into being on the first day of this year.
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