Tajikistan: Strong growth but from a narrow base
Overview:
The Tajik economy has continued to register positive growth throughout the global economic crisis. While this fact is encouraging it masks many of the deeper problems that the economy faces. In the short-term, the authorities must tighten monetary and fiscal policy to bring inflation down from its current 14% rate. In the medium to long-term the economy remains highly dependent on certain sectors (cotton and aluminium) and worker remittance inflows. Given this, the central bank should continue to demonstrate exchange rate flexibility in dealing with large external shocks. Moreover, the implementation of huge infrastructure projects and the maintenance of adequate social spending are essential but must be managed on a sustainable basis: public debt to GDP must be kept at a reasonable level.