Huge budget expenditures for infrastructural and anniversary projects on the occasion of the 20th anniversary of Tajikistan’s independence contributed to inflation growth in the country.
ADB experts predict reduction in the economic growth in Tajikistan in 2012. Economic growth is predicted to reduce by 1.9% – from 7.4% in 2011 down to 5.5% in 2012, ADB said in its annual Asia Development Review 2012.
According to the report, Tajikistan’s GDP in 2011 made 7.4% against 6.5% in 2010. GDP growth is closely connected to remittances, growth of agricultural production, services and industry.
ADB experts say that taking into account record amount of money remittances, which made about $3bln in 2011, a 13.5% growth in services represents the main factor of growth.
Agricultural production grew by 7.9% despite severe climate conditions. Thus, cotton production in the country has increased by 34%, reflecting a 30% growth in cotton production sector due to high cotton prices at world markets which stimulate additional cotton production.
Production of other crops has also increased. Industrial production in Tajikistan in 2011 grew by 5.9%.
According to the report, slowdown in economic growth in partner countries will cause its reduction in Tajikistan by 5.5%. ADB expects a 6% GDP growth in Tajikistan in 2013 thanks to improved tendencies in the global economy.
“Tajikistan should remove key barriers for private investments, including constraints for foreign investments, to ensure sustainable economic growth in a middle-term perspective,” ADB Representative Joji Tokeshi has said. “Private sector still makes less than a half of the country’s GDP while private investments – less than 5%.”
According to ADB, inflation level in the country in the next two years is expected to make 8.5-9%.
As for inflation level in 2011, ADB experts point at the growth in world prices for foodstuffs and fuel and high level of money remittances which contributed to the growth in internal demand for import and have doubled the average annual inflation level from 6.5% in 2010 up to 12.5% in 2011, even though the basic inflation (not taking into account foodstuffs and fuel) remained moderate making 5.7%.
According to the review, increase in export fees for oil products introduced by Russia – Tajikistan’s main supplier – caused a 59% growth in fuel prices in Tajikistan in the first half 2011.
Inflation of prices for foodstuffs reached its maximum level in the first half of the year, partly as a result of the growth in world prices. At the same time, the growth in prices for primary foodstuffs on average made 32% before the slowdown in the second half of the year.
“Huge budgetary expenditures for infrastructural and anniversary projects on the occasion of the 20th anniversary of Tajikistan’s independence also contributed to inflation growth,” ADB said in the review.
