DUSHANBE (Asia-Plus) — The decline in remittances from Russia, weak global demand and low prices for the country’s key export commodities such as aluminium and cotton will cause Tajikistan’s economic growth to slow to an estimated 4.2% in 2015, the World Bank said today in its new bi-annual Tajikistan Economic Update launched in Dushanbe. The fall in remittances and slowdown of economic growth is having a strong impact on income, which is expected to contract by 10% in 2015.

“Remittances are the second largest source of household income in Tajikistan, so this sharp decline in remittances is limiting household consumption and is putting the sustainability of recent gains in poverty reduction at risk”, said Patricia Veevers-Carter, Country Manager for the World Bank in Tajikistan.

The country medium-term growth prospects will depend on how well Tajikistan will adjust to the new external environment and address major macroeconomic risks related to its external-account volatility, low foreign-exchange reserves, contingent liabilities generated by state-owned enterprises and ongoing vulnerabilities in the banking sector.

“As external and domestic pressures continue to mount, addressing fiscal risks and implementing reforms to boost productivity, enhance competitiveness and strengthen social safety nets will be critical to sustain growth and support progress in poverty reduction”, said Marina Bakanova, the World Bank Senior Country Economist for Tajikistan.

The report argues that in order to sustain progress in poverty reduction and shared prosperity in the worsening external environment, Tajikistan’s development strategy should prioritize job creation. This strategy should focus on supporting job growth in the private sector, building better workforce skills and enabling access to jobs among the most vulnerable people and households.

“These objectives reflect the unique challenges faced by Tajikistan’s job market”, said Patricia Veevers-Carter, Country Manager for the World Bank in Tajikistan. “The World Bank is working with the Government of Tajikistan to achieve these objectives, and to support inclusive economic growth and job creation.”

The World Bank’s active portfolio in Tajikistan includes 25 projects (including regional projects) with a net commitment of $ 383 mln that aim to support economic growth through private sector development, while investing in better public services for people, such as education, health, municipal services and social protection. The World Bank Group is committed to continue supporting Tajikistan as it strives to improve the lives of its people and meet the aspirations of its young and growing population.