Tajikistan: A Population in Denial amid Global Financial Downturn

The main street in front of the Spitamen bazaar is clogged with idle taxis sputtering exhaust into the chill air. Said and Abdul, two young Tajiks in a tiny Daewoo hatchback, solicit passersby for their daily drive to Khujand, some 40km away. Business is slow.

"There are so many more cabs here this winter," laments Said as he flicks ashes from his stubby cigarette out the open window. "Everyone is coming back from Russia with no job, so they drive cars," adds Abdul. Indeed, the two friends are themselves part of the growing legion of laid-off guest workers. In their particular case, the duo returned home after losing their jobs at a St. Petersburg construction site in October.

In spite of the evident hardship that is spreading around them, Said and Abdul believe the global financial crisis won't take a terrible toll on Tajikistan. It is a common feeling. Although remittances of foreign wages have helped prop up the country for years, most Tajiks believe their economy is isolated from the rest of the world. Said, for example, plans to return to Russia next spring, along with many of his friends, to resume the seasonal migration. He is unfazed by news of the sharp downturn in Russia.

Officials in Dushanbe also share the view that since Tajikistan operates largely outside of global financial markets, the country will not be traumatized as much as neighboring Kazakhstan. In September, the National Bank of Tajikistan (NBT) issued a bold statement, declaring: "This crisis will not influence directly the financial system of our country as there is no participation of domestic banking capital in these [affected] markets." This sentiment has been tempered slightly in recent months, as officials have been forced to concede that falling aluminum and cotton prices are impacting the economy. In late January, the NBT announced that it was seeking $216 million in loans to support the country's hurting economy.

But the notion of isolation persists and has given many Tajiks the perception that, while they suffer their own internal brand of hardship, they are largely immune from the economic ailments afflicting the outside world.

Saodat agrees. A soft-spoken former kindergarten teacher, she left her low-paying job 10 years ago to sell children's clothes in the Spitamen bazaar. Her husband runs a shashlyk stand nearby. "We have our businesses," she says proudly, "and it's enough for our family." When asked whether she has seen anything to indicate a slowing economy in Tajikistan, she pauses thoughtfully before replying: "On the news I see what's happening and I worry for the people in America and Russia."

Experts are warning that Tajiks may be in for a rude awakening, saying the global downturn could end up taking a severe toll on the Central Asian nation. In its December briefing on Tajikistan, the IMF stated that "growth should slow in 2009 on account of stagnating remittances." Wages coming back from Russia or Kazakhstan have been the life support of this country for years and contribute roughly half the country's GDP, according to the World Bank.

Further exacerbating vulnerabilities, agricultural output is insufficient to meet the country's needs and Tajikistan remains a net importer of food.

Many Tajiks gauge the health of their economy by observing prices at the local market. The fact that official forecasts cite a decline in the overall rate of inflation means little to Manucher, an Isfara businessman who complained that "the prices of everything keep getting higher," as he toured the local bazaar.

Jumaboi, a cattle farmer in Mastchoh, near the Oybek border crossing with Uzbekistan, describes his confusion when explaining that the price of cattle has decreased over the past year while the price of butchered meat has risen from 12 somoni ($3.60) per kilo to 15 somoni. Another cattle farmer in Isfara attributed this phenomenon to the glut of cattle being brought to market by cash-strapped families.

Still another reason the global economic crisis has been slow to enter the daily dialogue here is the overwhelming absence of bank credit among the population. While the lack of leverage has blunted past growth, it now has the effect of cushioning the downturn. Tajikistan is almost entirely a cash-only economy and bank accounts or credit cards are rare. Within the last few years, micro-lending has grown in popularity, but the amounts handed out are small and typically have terms of less than a year. Most loans tend to be person-to-person rather than tied to an institution, and most Tajiks have little or no exposure to the banking sector.

But despite this institutional isolation, the informal economy of migrant wages is inextricably linked to the Russian and -- to a lesser extent -- Kazakh economies. The IMF reported that year-over-year growth of remittances was just one percent in November -- a significant slowing from past growth. Yet many Tajiks are chalking up the stagnant Russian job market to the normal seasonal downturn in the construction sector and, like Said, expect to return in the spring.

In just a few months this sentiment will be tested, as thousands return to Russian cities seeking jobs. Whether the cabbies of Spitamen will be back at work or not depends on distant economies. But having endured a bloody civil war, a bitter winter without electricity and the lowest GDP among the CIS countries, many Tajiks are not yet ready to concede that it is the economic ills of foreign nations that will bear most heavily on their wellbeing.