Tajikistan authorities advised to urgently change the economic development model

Analysts from the World Bank say Tajikistan needs to take urgent measures to improve its growth model and diversify its economy, as the current approach has led to a reduction in natural resource reserves and has not provided sufficient opportunities for productive employment.A new World Bank report entitled “Tajikistan Country and Climate Development Report" (CCDR) notes that over the past two decades, Tajikistan has experienced rapid economic growth and poverty reduction, but its economic growth model has reached its limits.  The report notes that from 2000 to 2023, GDP growth averaged over 7% per year, and the poverty rate fell from 30% in 2003 to 10.7% in 2023. However, "the existing growth model is not diversified and does not attract significant foreign investment outside of the mining sector," according to World Bank specialists.They highlight that the potential of domestic institutions is limited, and the local private sector is considered underdeveloped."Economic growth sustainability is largely dependent on household consumption, driven by remittances, which are vulnerable to external shocks, as well as agriculture and industry, which depend on natural resources," the publication emphasizes.Taken together, these factors suggest that the current growth model has reached its limit, according to World Bank analysts."Without decisive structural reforms, GDP growth is forecasted to slow down to 4.0%-4.5% in the medium and long term.  As the poorest country in the Europe and Central Asia region, with a gross national income of US$1,440 per capita, Tajikistan's aspiration to achieve an above-average income level while maintaining its current development trajectory will be postponed indefinitely," the report authors note.   More frequent and severe droughts, floods, landslides, heat, and air pollution are just some of the impacts Tajikistan faces from climate change, the report says, noting that these disasters underscore the need for urgent action to protect the country's people and economy from climate shocks. According to CCDR, the cost of inaction would be high: climate change-related damages to infrastructure, livestock productivity, and agriculture could reduce real GDP by 5-6% by 2050; the annual average costs of land degradation in Tajikistan are estimated at nearly US$325 million, which is only expected to double by 2050; air pollution already accounts for 84 deaths per 100,000 residents—the second highest in Central Asia—that would only worsen without investment and policy reform; and climate impacts could push an additional 100,000 people into poverty, with women, children, and persons with disabilities most at risk.Climate action reportedly offers Tajikistan an opportunity to transform its economy and create jobs while protecting its people from the growing risks of extreme weather events induced and exacerbated by climate change.  While the Government of Tajikistan has outlined an ambitious plan to green the country's economy, the World Bank Group’s CCDR finds that it can go further to ensure a resilient development path.The green and resilient transformation will require reforms to open markets and mobilize private investment and hinges on implementing a broad suite of structural reforms to lay the foundation for low-carbon development.  In particular, Tajikistan should focus on opening up its economy to better attract private investment and improve public service delivery, including through better governance in state-owned enterprises.  In addition, strengthening the education, healthcare, and social protection systems is vital for human capital development and equipping the workforce with the needed skills.The Tajikistan CCDR sets out five policy packages to enhance the country’s resilience to climate change, accelerate low-carbon development, and ensure an inclusive green transition: 1)strengthen institutions and regulations; 2) implement just and inclusive climate strategies; 3) mobilize climate finance; 4)strengthen adaptation at the water-energy-food nexus; and 5) accelerate low-carbon development.  Tajikistan stands to reap considerable benefits from advancing these policies to enhance resilience to climate change, accelerate low-carbon development, and ensure an inclusive green transition.