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Wednesday 2 November 2011

Tajikistan Sees GDP Growth at 7-8% 2012-14


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DUSHANBE (Reuters) – Tajikistan’s economy will grow about 7-8% a year in gross domestic product terms in 2012-2014, while inflation will likely be around 10.5% in 2012, the country’s finance minister told parliament on Wednesday.

Tajikistan has one of the lowest per capita GDPs among the 15 former Soviet republics. Because of a lack of employment opportunities in Tajikistan, nearly half of the labour force works abroad, primarily in Russia and Kazakhstan, supporting families in Tajikistan through remittances. The exact number of labour migrants is unknown, but estimated at around 1 million. Less than 7% of the land area is arable. Cotton is the most important crop, but this sector is burdened with debt and obsolete infrastructure; moreover, government has encouraged a gradual transition away from cotton and towards food cultivation due to its concerns about feeding the population. Mineral resources include silver, gold, uranium, and tungsten. Industry consists only of a large aluminium plant, hydropower facilities, and small obsolete factories mostly in light industry and food processing.
While Tajikistan has experienced steady economic growth since 1997, more than half of the population continues to live in poverty. Economic growth reached 10.6% in 2004, but dropped below 8% in 2005-08, as the effects of higher oil prices and then the international financial crisis began to register – mainly in the form of lower prices for key export commodities and lower remittances from Tajiks working abroad, due to the global economic downturn. In 2009 GDP growth dropped to 3.4% as a result of the world recession.

Members of Tajikistan’s lower house approved the 2012 budget on Wednesday, including a forecast for GDP growth of 8% in 2012, up from an expected 6.5% in 2011. Inflation is forecast to slow down to 10.5% by the end of 2012 from 13% in 2011

The landlocked central Asian nation bordering China and Afghanistan is the poorest of the 15 former Soviet states. Its GDP growth fell to 3.9% in 2009 during the economic crisis. Almost half of the 7.5 million population lives on less than $2 a day, according to World Bank data. “The federal budget for 2012 is oriented on social-economic policy and enables various strategies and government programmes for the development of Tajikistan, in particular lowering poverty in the republic,” Finance Minister Safarali Nazhmudinov (سفرعلی نظم الدینوف) said.

The government’s growth estimates are more optimistic than those of the International Monetary Fund, which in October forecast GDP growth for Tajikistan of 6% in 2011 and 2012.

The Fund also urged the government to tackle double-digit inflation, which has been pushed up by rising food and fuel costs.

The 2012 budget is worth 35.8 billion somoni (US $7.53 billion), up from 30 billion somoni this year. The government anticipates cutting the budget deficit to 0.5% from 1%. Spending on health and education will rise by more than 20% to 1.4 billion somoni and 726 million, respectively. The budget must now be approved by the upper house of the parliament and long-term President Imomali Rakhmon, two steps expected to be formalities.

Tajikistan GDP
Real growth rate (%)

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