Tajikistan’s economic growth has dropped significantly and is unlikely to return to previous levels in the near or medium term, a recent World Bank report says. GDP growth in the region’s poorest state slowed to 6.7 percent last year from 7.4 percent in 2013 and the World Bank estimates that in 2015 GDP growth will plummet to 3.2 percent.
Why the drop? Tajikistan’s economic story, like that of Kazakhstan and the other Central Asian republics, is linked in large part to Russia. Tajikistan is the world’s most remittance-dependent country. Remittances, 90 percent of which originated in Russia, made up 42.7 percent of Tajikistan’s GDP in 2014. The World Bank notes that “in the first two months of 2015 remittances were about 40 percent lower in U.S. dollar value than in the same period of 2014” and that remittances “are the main channel for transmission of Russia’s slowdown and ruble depreciation to Tajikistan.”
Other factors causing the drop, and contributing to a sluggish recovery, are slowed growth in Tajikistan’s major trading partners (Russia, China, Turkey) and weakening global demand, evidenced by falling prices, for the country’s main export commodities (aluminum and cotton).
The report notes that the government’s policy response has been mixed but does say 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.”
In March, Tajikistan began construction on a new theater, estimated to cost over $100 million. Eurasianet commented last month that the country hardly needed another theater given that “Tajikistan regularly struggles to balance its budget and depends on foreign aid to fund many basic social services. From 2010-13, the World Bank gave Dushanbe $55.4 million in budget support as a grant, and is considering another $20 million grant this year.”
But construction projects mean jobs and Tajikistan is in desperate need of those as the latest World Bank report makes clear:
Because employment opportunities at home have been limited, 40 percent of the working-age population — the vast majority under 30 — have sought better jobs abroad. Migration to the Russian Federation — the major host country for Tajikistani workers — has grown rapidly since 2000, though from a relatively low base. By 2013 remittances had risen to nearly 50 percent of GDP, making Tajikistan the most remittance-dependent country in the world.
Work in Russia has become more inaccessible. About one million Tajik citizens live in Russia (an estimated 60 percent are illegal immigrants), and the report notes that these are “at risk of job loss, lower paychecks, higher fees, and ultimately fewer resources to send back home” as a result of stricter labor and migration laws in Russia:
Russian legislation in 2014 put 270,000 Tajikistani 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 labor 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. Also, on January 10, 2015, a new law came into force that bans those found to be staying illegally in Russian Federation territory from reentering for 10 years. These regulations exacerbate the already dire conditions of labor migrants.
As David Trilling points out, Tajikistan may be pressured into joining the Eurasian Economic Union (Kyrgyzstan just did) as membership would alleviate some of the restrictions on migrant workers.
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. The report 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.
Notably, Tajik and Chinese coverage of the World Bank report focused on the decline in poverty — which the report says is highly seasonal but fell from 36 percent in 2011-2012 to 34.5 percent in 201-2014. Xinhua’s headline: “Poverty in Tajikistan continues to fall.” Neither story, however, makes mention of Russia or the decline in remittances, which lead the report and make up the bulk of its analytical focus.