Country Report Tajikistan March 2011

Outlook for 2011-12: Economic growth

Rising inflows of remittances, as the Russian and Kazakh economies posted a more robust performance, helped to boost growth in 2010, as did higher export revenue, owing to high global prices for Tajikistan's main exports, aluminium and cotton. Real GDP growth was 6.5% in 2010, following growth of 3.4% in 2009. Rising remittances will boost household consumption in 2011-12, although remittances will remain lower than in 2008. Industry performed poorly in 2009, with output contracting by 6.3%. Rising prices for aluminium and cotton exports on global markets reversed this trend in 2010, and commodity export prices will remain at historically high levels in 2011-12, despite an expected fall in 2012. Industry will continue to be susceptible to problems in the power sector, with Tajikistan facing periodic blackouts. Tajikistan is struggling to secure foreign investment for its most significant hydropower project, but some limited financing will come from government sources and the domestic private sector. This will help to boost construction, as will foreign financing for smaller infrastructure projects. We expect that growth will pick up in 2011, to 7%, as faster growth in Russia and Kazakhstan boosts inflows of remittances. Growth is expected to slow in 2012, to 6%, as lower commodity export prices hamper investment.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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