DUSHANBE (TCA) — Tajikistan’s economic growth to slow down in 2020-2021 due to lower capital investment in the power sector. This finding was presented in a macroeconomic review for Tajikistan prepared by the Directorate for Research at the Eurasian Development Bank (EDB).
According to the EDB, Tajikistan’s GDP growth is forecast at 7.2% in 2019 and will be driven by households’ consumer activity and higher outputs in mining and agriculture. Compared to the previous estimates (April 2019), the figure was raised by 0.2 percentage points, primarily because of strong investment activity in the country. The EDB analysts expect Tajikistan’s economic growth to slow down to an average of 6.5% in 2020-2021 due to lower capital investment in the power sector.
They point out to accelerated inflation in the first six months of 2019 because of increased food prices. Compared to the previous forecast (April 2019), the EDB revised its inflation estimate for 2019 by 1.6 percentage points. According to Andrey Falileyev, Director for Research at the EDB, the weak external inflation environment will contribute to a slowdown of food prices in the second half of 2019 and inflation will remain within the target interval of 6±2% in 2020.
The authors of the review note that the National Bank of Tajikistan reduced the refinancing rate after the first six months of 2019, expecting that non-monetary factors, which play a crucial role in speeding up inflation in the country, and high agricultural outputs will slow down price increases in Tajikistan in the near future. Andrey Falileyev suggests that the National Bank of Tajikistan may reduce its rate further in 2020-2021 if inflation remains within the targets.
The risks for the country’s economy are typical of the region. The worsening of the global economic situation may affect exports and money remittances from abroad. To ensure stable development, the country needs to continue its balanced fiscal and monetary policies and take measures to improve labour productivity and the business climate.
The Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. The EDB’s charter capital totals US $7 billion. The member states of the Bank are Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, the Russian Federation, and Tajikistan.
