During the first half of 2022, growth in Tajikistan slowed to 7.4% from 8.7% a year earlier, says a report released by the Asian Development Bank (ADB) on September 28.
Asian Development Outlook 2022: Entrepreneurship in the digital age Update (September 2022), in particular, says the slowdown reflected moderating production, weak exports, and lower consumption as recession in Russia cut remittances while food prices surged and private lending diminished. Nevertheless, growth exceeded earlier projections because recovery in the value of the Russian ruble against the US dollar trimmed the decline in remittances. Expansion in industry dropped from 23.4% to 17.3%, reflecting disruption in the supply of inputs. Rising fertilizer prices and less favorable weather slowed growth in agriculture from 8.1% to 7.2%. Expansion in services moderated from 16.5% to 12.8% as a 10% fall in remittances in the first 5 months of 2022 relative to a year earlier slowed growth in retail trade from 17.1% to 9.3% and disruption to external trade cut transportation by 8.5%.
On the demand side, expansion in gross fixed investment reportedly fell from 23.7% during the first half of 2021 to 4.1% this year as cuts in nonpriority government spending and the decline in remittances and disposable household income slashed growth in construction, much of which is for private housing, from 33.5% to 2.5%.
Lower remittances and surging inflation constrained growth in consumption, while rising imports opposite flat exports expanded the deficit in net exports.
Reported annual inflation averaged 8.3% in the first half of 2022, down from 9.0% in the same period of 2021. Prices reportedly rose by 9.6% for food, 6.6% for other goods, and 8.4% for services, reflecting a surge in global commodity prices.
To restrain inflation, the National Bank of Tajikistan, the central bank, raised its policy rate from 13.25% to 13.50% on August 22 and expanded sales of deposit certificates to absorb liquidity.
In response to pressures on the exchange rate from ruble depreciation and the drop in remittances, and to eliminate a significant gap between official and market exchange rates, on March 9 the central bank devalued the Tajik somoni by 15% against the US dollar.
The somoni subsequently appreciated by 21% to the end of June as the ruble strengthened against the US dollar. In addition, a hike in electricity tariffs was postponed until 2023. With these developments, this
Update cuts inflation forecasts for 2022 and 2023.
Previously, the Tajik media had received information about remittances on the Russia’s Central Bank’s website. But after the beginning of the Russian-Ukrainian conflict, Russia’s financial regulator has refrained from publishing such data.
For the last time, the Central Bank of Russia published such data in the second half of March (information for 2021).
In 2021, 1.8 billion U.S. dollars were sent to Tajikistan from Russia through money transfer systems, which was 3.4 percent more than in 2020.
