Tajikistan is the latest country in Central Asia to get a bad news update on its economy, although probably to nobody’s great surprise.
The World Bank said on November 17, during its latest bi-annual update on the state of the country’s economy, that gross domestic product growth is set to slow to 4.2 percent this year.
That dip in performance is down to the widely reported decrease in remittances from Russia, as well as reduced demand and prices for Tajikistan’s main export commodities — aluminum and cotton.
“Remittances are the second largest source of household income in Tajikistan, so this sharp decline in remittances is limiting household consumption and is putting the sustainability of recent gains in poverty reduction at risk,” World Bank country manager Patricia Veevers-Carter said in a statement.
The figure offered for this year marks a decline from the 6.7 percent growth registered in 2014, but is still higher than the deep slump to 3.8 percent growth seen in 2009, when the world was in the throes of a financial meltdown. But the immediate post-crash recovery seen at that time is unlikely to be repeated as swiftly since Russia’s economy is set to remain in the doldrums for some time to come at current estimates.
The World Bank suggested that Tajikistan’s way out of crisis will be to support job creation in the private sector, improve workforce skills and enable access to labor among the most vulnerable.
The country has the region’s most parlous foreign exchange reserves situation, chronically loss-making state enterprises and a dismal banking sector, which is compounding matters even further.
“As external and domestic pressures continue to mount, addressing fiscal risks and implementing reforms to boost productivity, enhance competitiveness and strengthen social safety nets will be critical to sustain growth and support progress in poverty reduction,” the World Bank’s senior economist for Tajikistan, Marina Bakanova, said in the statement.
The U.S. State Department’s most recent Investment Climate Statement on Tajikistan spells out in sharp detail, however, why immediate improvements to competitiveness and productivity are unlikely to occur.
The underdeveloped — and dubiously operated — banking system is not up to the job of assisting local enterprises. Foreign currency is thin on the ground, making substantial transactions difficult.
Even those that manage to build up businesses cannot be certain they will not have them taken away.
“Tajikistan has a history of expropriating,” as the U.S. State Department puts it.
That said, U.S. investors have not been subject to consistent expropriations, although there appears to be a good reason for that.
“There are no ‘high-risk’ sectors prone to expropriation actions,” according to the Investment Climate Statement.
Investors also want to know about regulations before entering a new market, but that is a deeply problematic issue in Tajikistan.
“Tajikistan's regulatory system lacks transparency. Executive documents — presidential decrees, laws, government orders, instructions, ministerial memos, and regulations — are often inaccessible to the public,” according to the State Department’s findings. “Each ministry has its own set of unpublished regulations that may contradict laws or the regulations of other ministries.”
Would-be job creators must also rely on a profoundly flawed justice system for protection. Freedom House has been scathing in its most recent assessments.
“The judiciary lacks independence. Many judges are poorly trained and inexperienced, and bribery is reportedly widespread,” Freedom House said in its 2015 Freedom in the World update.
Is the government paying heed to such insights?
In typical fashion, Tajikistan’s state news agency Khovar devoted some fiery vituperation for the doom-mongers.
“The spit-poisons are given no rest by Tajikistan’s dynamic economic development,” Khovar writer Alfiya Bashirova wrote in a November 9 editorial.
Bashirova was eager to highlight the achievement of multiple alleged major infrastructure projects, such as bridges, transport links and industrial plants in the Khatlon provice and the Gorno-Badakhshan Autonomous Region. Anybody traveling to Gorno-Badakhshan Autonomous Region along roads so appalling that motorists frequently get stuck on them will be surprised by that boast.
Bashirova was insistent, however.
“These are all real things, the existence of which cannot be denied and debated, they are constructions that skeptics and detractors can see with their own eyes,” she wrote.