Azernews.Az

By Sara Rajabova

The sharp drop in global oil prices, as well as the recession in Russia has slowed down the economic growth of the Central Asia, amounting to 5.1 percent in 2014, according to the Asian Development Bank’s recent report.

The weak state of the Russian economy, associated with the sanctions over Ukraine crisis especially have significantly affected Tajikistan that heavily dependent on the remittances from Russia.

Russia’s economic slump will further slow export and remittances to Tajikistan, lowering the economic growth in the country, according to the report.

Economic growth will likely slow further to 4 percent in Tajikistan in 2015, affected by a slowdown in Russia, ADB’s Asian Development Outlook 2015 said.

Growth in Tajikistan slowed to 6.7 percent in 2014 from 7.4 percent in 2013 as remittance inflows, which are equivalent to almost half of the country’s GDP, fell sharply by 8.3 percent in U.S. dollar terms. The fall was most pronounced in the fourth quarter and reflected prolonged economic slowdown, lost jobs, and currency depreciation in Russia, which hosts up to 90 percent of the one million Tajik migrant workers, the report said.

However, the report noted that the growth could recover somewhat to 4.8 percent in 2016 with some improvement in Russia and the external environment generally.

“This will likely be supported by new job creation along the Trans-Tajik Gas Pipeline, which was ratified by parliament in December 2014 and is slated to begin construction this year. Plans to increase social spending and raise public sector wages by 25 percent beginning in September 2015 should add to growth in 2016,” according to ADB.

The report said inflation will likely accelerate in 2015 to 10 percent or more as currency depreciation raises the prices of imported consumer good, adding that a more stable currency and some recovery in remittances would allow inflation to ease back to 6.5–7.0 percent in 2016.

“With growth slowing, the current account deficit is forecast to narrow to 5.9 percent of GDP in 2015. It could narrow further to 4.8 percent in 2016 with some recovery in remittances. Exports are projected to grow by 14 percent in 2015 to $1.6 billion and a further 13 percent to $1.8 billion in 2016, while imports are projected to decline by 16 percent in 2015 to $4.8 billion in 2015, before recovering by 6 percent to $5.1 billion in 2016,” the report said.

It went on to say that remittances will likely contract further in 2015 as new regulations require that migrants to Russia have Russian language proficiency, as well as medical tests and health insurance that are estimated to cost about $500 per Tajik migrant. The report noted that this will induce more to return home.

Remittances are expected to recover somewhat in 2016 along with the economy of Russia, according to the report.

Tajikistan heavily relies on its migrant remittances from Russia, home to millions of migrants.

The International Monetary Fund has forecasted in 2015 a sharp fall in remittance flows to Tajikistan. It said dollar remittance flows to Tajikistan will decline by approximately 30 percent this year compared to 2014.

Some 42 percent of the country’s economy relies on the money sent by Tajik migrants working mostly in Russia. However, the new restrictions on immigration and dramatic fall of ruble worsened the conditions for Tajik migrants.

In 2014, the Federal Migration Service of Russia deported more than 200,000 Tajik citizens who worked without proper permission or committed administrative violations, according to Russian officials. That number is expected to grow with tighter regulations adopted in January.

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Sara Rajabova is AzerNews’ staff journalist, follow her on Twitter: @SaraRajabova

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