Outlook for 2011-12

The Economist Intelligence Unit expects Tajikistan to face an ongoing threat of instability in 2011-12. Regional Islamist groups show an increasing capability of staging attacks within Tajikistan. High levels of poverty and unemployment will provide a source of popular grievance. The goal of structural reform will have to be balanced against preventing a rise in social unrest. Real GDP is forecast to grow by 7% in 2011, following growth of 6.5% in 2010, as global economic trends boost demand for Tajikistan's main exports. Growth will slow slightly in 2012 as commodity prices trend down. Inflation will also be dictated by global price trends in 2011-12, and we forecast average annual inflation of around 8%, compared with 6.4% in 2010. Higher food and fuel import prices in 2011 will be offset by robust export revenue stemming from high global aluminium and cotton prices. We therefore forecast that the current-account surplus will increase in 2011, before falling in 2012 as commodity prices decline.

The political scene

The president, Imomali Rahmon, appears unconcerned by the wave of popular protest against authoritarian and nepotistic regimes in the Middle East and North Africa (MENA), and has continued to appoint family members to senior official posts. Nevertheless, new laws are being introduced to boost the powers of the security services, and the authorities continue to clamp down on what they perceive as radical Islamist activity. These moves highlight the continued uncertainty of the security situation.

Economic policy

The state budget recorded a surplus of 0.9% of GDP in the first 11 months of 2010, although end-of-year spending is likely to have pushed it into deficit over the year as a whole. The budget for 2011 again targets a deficit of 1% of GDP, with one-fifth of total spending allocated to the Roghun hydropower project.

The domestic economy

Real GDP expanded by 6.5% in 2010, and industrial output rose by 9.7%. Industry was helped by higher coal output and by a 5% increase in the raw cotton harvest, which boosted production of cotton fibre. Consumer price inflation averaged 6.4% over 2010 as a whole, although it accelerated to 9.8% year on year in December, pushed up by higher global food and fuel prices.

Foreign trade and payments

Goods exports rose by 18.3% in 2010, to US$1.2bn, whereas imports rose by only 3.5%, to US$2.7bn. The trade deficit, of US$1.5bn, was therefore 6.2% smaller than in 2009. Exports were pushed up by high global prices for Tajikistan's main commodity products of aluminium and cotton.