DUSHANBE, June 30, 2023 - Tajikistan experienced strong economic growth and record-low inflation in 2022, despite regional instability and global inflation, according to the World Bank's annual Tajikistan Economic Update released today. The country's economic activity was bolstered by remittance flows and expanded services and industrial production, leading to real GDP growth of 8 percent in 2022.
According to the report, Tajikistan's external position remained strong due to the migrant transfers, with international reserves sharply increasing to cover more than 9 months of imports. However, the financial sector continued to struggle, driven by high levels of non-performing loans, dollarization, and high exposure to inefficient state-owned enterprises. Small and medium-sized businesses (SMEs) continue to face challenges in obtaining financing due to high-interest rates and high collateral requirements.
The report highlights that Tajikistan's prudent monetary policy and exchange rate appreciation contributed to achieving the lowest inflation rate in the region, with consumer price inflation dropping to 4.2 percent. This is significantly lower compared to the double-digit inflation rates observed in most other economies within the region. The report also mentions that while the Tajik economy is expected to grow at 6.5 percent in 2023 and 4.5-5 percent over the medium term, the country remains highly sensitive to external and internal shocks, such as geopolitical uncertainty in the region and slow implementation of structural reforms, especially in state-owned enterprise performance and the dynamism in the private sector.
"To accomplish the goals outlined in the National Development Strategy 2030, Tajikistan must address the obstacles that are impeding its economic growth potential and preventing the creation of a sustainable high-quality employment opportunities," said Ozan Sevimli, World Bank Country Manager for Tajikistan. "Despite prior reform efforts, there remains a substantial scope for enhancement in order to transition from being among the reformers to emerging as one of the top performers."
In this edition, Tajikistan Economic Update takes a deep dive into difficulties that the private sector faces in Tajikistan, which is characterized by low new firm entry rates, low firm productivity, and limited integration to the international trade. The business environment does not reward efficient firms and those with the highest growth potential. To boost the dynamism of the private sector in Tajikistan, the report emphasizes the need to remove barriers to competition, strengthen the regulatory framework for attracting investments and enhance trade policies and trade facilitation measures.
The World Bank is currently financing 26 projects in Tajikistan, totaling $1.6 billion. Since 1996, the World Bank has provided over $2.8 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.
