Tajikistan Economic Update, Spring 2017 : Strong Growth with a Challenging Outlook
Despite continuing external challenges, economic output rose strongly in 2016 according to official estimates. Driven mainly by foreign-financed public and private investment, real gross domestic product (GDP) expanded by a robust 6.9 percent. At t...
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/699491500886178530/Tajikistan-Strong-growth-with-a-challenging-outlook http://hdl.handle.net/10986/28268 |
| Summary: | Despite continuing external challenges,
economic output rose strongly in 2016 according to official
estimates. Driven mainly by foreign-financed public and
private investment, real gross domestic product (GDP)
expanded by a robust 6.9 percent. At the same time, a
protracted decline in real remittances and exchange rate
depreciation in the context of an improving but still
complex external environment led to a significant adjustment
in the current account balance. The authorities pursued
expansionary fiscal policies in 2016, including through a
considerable increase in foreign-financed capital investment
in the energy sector, road infrastructure, and projects
related to the country’s 25th anniversary of independence.
The government also stimulated domestic demand by raising
public sector wages and social transfers. Monetary policy
was accommodative, supporting a heightened demand for local
currency as the exchange rate stabilized and wholesale
transactions that were previously conducted in foreign
currency switched to local currency. Materialized risk in
the financial sector and the subsequent bailout of
Tajikistan’s two largest banks at end-2016 resulted in a
deterioration of fiscal and debt sustainability indicators.
Lingering challenges in the financial sector, high
state-owned enterprise (SOE) contingent liability risk, and
an unconducive business climate weigh on economic growth
prospects. A weaker-than-expected recovery in regional
economies or delays in the expansion of the targeted social
assistance (TSA) program can derail poverty reduction
efforts. Continuing challenges in accessing credit by
pro-poor sectors of the economy will diminish the pace of
both poverty reduction and job creation in low-skilled
sectors like construction and agriculture. |
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