DUSHANBE, July 16, 2024 - Tajikistan's economy has shown remarkable growth in recent years, with an impressive expansion of 8.3% in 2023 and 8.2% in early 2024, according to the World Bank's latest Tajikistan Economic Update released today. According to the report, the growth was driven by increased revenues from gold exports and substantial public infrastructure spending. Robust worker remittances and public wage increases also strengthened domestic demand, contributing to overall poverty reduction in the country.
The report highlights that Tajikistan has managed to control inflation through a combination of declining global food and fuel prices and a tighter monetary policy. High disbursement of external grants have supported the fiscal position, leading to a reduction in public debt levels. However, the economic outlook faces several challenges with more subdued economic growth projected at 6.5% in 2024 and 4.5% in the medium-term, reflecting sluggish growth in key trading partners, such as China, Kazakhstan, Russia, and Türkiye, and domestic reform inertia.
Potential risks to the economic outlook include escalation of global and regional tensions and stricter migration policies in Russia. The report cautions that in order for Tajikistan to ensure sustainable development, it needs to implement structural reforms focused on enhancing economic openness and competitive neutrality, and improve public sector governance, transparency and accountability for better public service delivery. The report also highlights the importance of promoting adaptation measures to mitigate the impacts of climate change and the need to strengthen economic resilience against natural disasters.
"Tajikistan's recent economic performance is commendable, but sustaining this momentum will require concerted efforts to address structural challenges to ensure competition among all economic players." said Ozan Sevimli, World Bank Group Country Manager for Tajikistan. "Embracing fair competition and competitive neutrality between state-owned enterprises and the private sector is vital for fostering innovation, driving efficiency, and ensuring that all players can thrive on a level playing field, ultimately benefiting the economy and society as a whole," he added.
In this edition, Tajikistan Economic Update points to the significant influence of state-owned enterprises (SOEs) in Tajikistan's economy. With over 1,000 registered and more than 600 majority state-owned, SOEs have prominent positions in key sectors such as mining, energy, and telecom, with the top 10 SOEs holding 97% of total SOE assets. However, most SOEs are unprofitable, with the top 25 SOEs incurring a net loss of TJS 4.2 billion (3.2% of GDP) in 2023, posing fiscal risks.
To address these challenges, well-defined policies are needed in Tajikistan to ensure competitive fairness, transparent state aid, and reforms that encourage equitable competition. By creating a level playing field for investors, Tajikistan can unlock its economic potential, foster private sector growth and achieve sustainable economic development.
The Summer 2024 Tajikistan Economic Update is available here.
The World Bank is currently financing 25 projects in Tajikistan, totaling $1.58 billion. Since 1996, the World Bank has provided over $2.94 billion in IDA grants, highly concessional credits, and trust funds for Tajikistan. The World Bank is committed to continuing its support as the country strives to improve lives and meet the aspirations of its young and growing population.
