Tajikistan Faces Severe Economic Decline
World Bank report has a severe outlook for Central Asia’s poorest state
Wednesday 9 September 2015, by
PARIS — Tajikistan’s economic growth has dropped significantly ant its GDP growth slowed to 6.7% last year from 7.4% in 2013. World Bank estimates that in 2015 GDP growth will drop furthermore to 3.2%. According to World Bank, in this region’s poorest state is unlikely to return to previous levels in the near or medium term.
- Tajik workers in Russia
- Migrant workers wait for work at a vegetable market on the outskirts of Moscow, November 11, 2011.
(Photo: courtesy of Foreign Affairs)
As the world’s most remittance-dependent country, Tajikistan and its economy are correlated in large part to Russia from which 90% of transfers originate. In 2014, remittance constituted 42.7% of Tajikistan’s GDP while in the first two months of 2015 remittances were about 40% lower in U.S. dollar value than in the same period of 2014, due partly by the depreciation of ruble. Other factors causing the plunge, and contributing to a sluggish recovery, are slowed growth in Tajikistan’s major trading partners (Russia, China, Turkey) and weakening global demand, pushing commodity (aluminium and cotton) prices to down.
Since employment opportunities at home have been inadequate, 40% of the working-age population — the vast majority under 30 — have sought jobs abroad. From a relatively low base, migration to the Russian Federation — the major host country for Tajik workers — has grown rapidly since 2000 and by 2013 remittances had risen to nearly 50% of GDP, making Tajikistan the most remittance-dependent country in the world.
However, in recent years working in Russia has become more difficult. Currently, an estimated of one million Tajik citizens live in Russia, 60% of which are believed to be illegal immigrants. World Bank fears that these are at risk of job loss, lower wages, higher fees, and ultimately fewer resources to send back home as a result of stricter labour and migration laws in Russia. Russian legislation in 2014 put 270,000 Tajik workers on the re-entry ban list as of November 2014, reducing paid work opportunities. The number of blacklisted migrants reportedly increased in the beginning of 2015. If those labour migrants return home, they are likely to stay home for up to five years. Furthermore, since January 1, 2015, biometric passports are required for all migrants entering Russia. Moreover, since January 10, 2015, a new law bans those found to be staying illegally in Russian Federation territory from re-entering for 10 years.
These regulations aggravate the already grim conditions of labour migrants. Some analysts think Tajikistan may be forced to join the Eurasian Economic Union as membership would ease some of the restrictions on migrant workers. The government has asked Russian immigration authorities to provide amnesties for some with reentry bans.
According to the World Bank, the drop in remittances is not a short-term problem but an issue likely to plague the Tajik economy for years to come. It encourages Tajikistan to seek better treatment of Tajik migrants abroad, provide better financial services to migrants and their families, and invest in human capital development — basic education, specialized skills and language training — that would make Tajik workers more successful abroad and more useful back home.
In its recent report, World Bank estimates that the government’s policy response has been mixed but admits that “the government continued its commitment to a generally balanced budget while protecting social spending and postponing spending on categories deemed to be of lower priority.” Notably, Tajik coverage of the World Bank report focused on the decline in poverty.