Republic of Tajikistan. Recent social and economic trends and short-term prospective. May 2020

16 June 2020

In 2019, Tajikistan's GDP grew by 7.5% compared to 7.3% in 2018 due to rapid growth in consumption and exports. An increase in remittances contributed to maintaining high consumer activity in the context of almost zero growth in real wages. A rise in gold production led to an increase in exports. Inflation accelerated to 8% at the end of the year, against 5.4% a year earlier, which is mainly due to the rise in price of wheat and flour imported from Kazakhstan. The growth rate of the monetary base increased significantly in the context of easing the NBT’s policy and that pushes the inflation risks up. A decline in public investment has contributed to a more balanced budget, despite a fall in revenues. In 2019 the budget deficit decreased by 0.8 percentage points to 2.9% of GDP, compared to the previous year. The trade deficit fell by 0.8 percentage points to 26.8% of GDP, mainly due to lower imports. Specifically imports of investment and intermediate goods (metals) decreased, while imports of consumer goods showed positive dynamics, based on continued growth of domestic demand and strengthening of the real exchange rate of the somoni in the context of higher inflation than in trading partners. In 2020, despite the absence of registered cases of COVID-19 in Q1, a significant slowdown in economic growth of the Tajik economy is expected. The slowdown in economic activity in partner countries and the expected recession in Russia will lead to a reduction in domestic and external demand through the channels of trade, investment and remittances.