Immigrant remittances account for almost 47 percent of Tajikistan’s GDP (mostly from Tajiks working in Russia). The present economic position is nevertheless precarious, due mainly to corruption, unequal economic reforms, and economic mismanagement. The economy is extremely susceptible to external shocks since foreign income is dangerously reliant on remittances from migrant workers abroad and exports of aluminum and cotton. International aid remained an important source of support for rehabilitation initiatives that reintegrated former civil war fighters into the civilian sector, thus helping to maintain the peace in FY 2000. International aid was also required to handle the second year of severe drought, which resulted in a continuing food production deficit. On August 21, 2001, the Red Cross declared a famine in Tajikistan and requested international assistance for Tajikistan and Uzbekistan; nevertheless, access to food remains an issue today. Food insecurity affected 680,152 Tajiks in January 2012. 676,852 were at danger of Phase 3 (Acute Food and Livelihoods Crisis) food insecurity, whereas 3,300 were at risk of Phase 4 food insecurity (Humanitarian Emergency). Those at greatest risk of food insecurity lived in GBAO’s rural Murghob District.
Tajikistan’s economy expanded significantly following the conflict. According to World Bank statistics, Tajikistan’s GDP grew at an average annual rate of 9.6 percent between 2000 and 2007. This boosted Tajikistan’s standing in comparison to other Central Asian nations (particularly Turkmenistan and Uzbekistan), which seem to have deteriorated economically subsequently. Tajikistan’s main sources of revenue include aluminum manufacturing, cotton cultivation, and remittances from migrant labor. Cotton provides for 60% of agricultural production, supports 75% of the rural population, and accounts for 45 percent of irrigated arable land. The state-owned Tajik Aluminum Company represents the aluminium industry, since it is the largest in Central Asia and one of the largest in the world.
Tajikistan’s rivers, such as the Vakhsh and the Panj, offer significant hydropower potential, and the government has prioritized soliciting investment for projects for domestic consumption as well as energy exports. Tajikistan is home to the world’s tallest dam, the Nurek Dam. Russia’s RAO UES energy conglomerate has recently been working on the Sangtuda-1 hydroelectric power plant (670 MW capacity), which began operations on January 18, 2008. Other projects in the planning stages include Iran’s Sangtuda-2, China’s SinoHydro’s Zerafshan, and the Rogun power plant, which, if completed, would surpass the Nurek Dam as the tallest structure in the world at 335 meters (1,099 feet). CASA-1000, a proposed project, would transport 1000 MW of excess energy from Tajikistan to Pakistan through Afghanistan. The entire length of the transmission line is 750 kilometers, and the project is intended to be a Public-Private Partnership with the assistance of the World Bank, IFC, ADB, and IDB. The project is expected to cost approximately $865 million USD. Other energy resources include large coal deposits and lesser natural gas and petroleum reserves.
Tajikistan was the world’s most remittance-dependent economy in 2014, accounting for 49 percent of GDP, and remittances are projected to decrease by 40 percent in 2015 owing to Russia’s economic crisis. Tajik migrant workers abroad, mostly in Russia, have become by far the primary source of income for millions of Tajiks, and the World Bank predicts that with the 2014–2015 Russian economic slump, a significant number of young Tajik males would return home with limited economic prospects.
Approximately 20% of the population, according to some estimates, lives on less than US$1.25 per day. Tajik migration and remittances have been unparalleled in terms of volume and economic effect. Tajik labor migrants’ remittances reached an estimated $2.1 billion US dollars in 2010, an increase from 2009. Tajikistan transitioned from a planned to a market economy without significant and prolonged need on assistance (of which it currently gets only minimal amounts), and solely via market-based methods, simply by exporting its primary comparative advantage – inexpensive labor. According to the World Bank’s Tajikistan Policy Note 2006, remittances have played an essential role as one of the drivers of Tajikistan’s strong economic development over the last few years, increasing earnings and, as a consequence, helping to considerably decrease poverty.
Tajikistan’s main illicit source of revenue is drug trafficking, since it serves as a transit nation for Afghan drugs destined for Russian and, to a lesser degree, Western European markets; some opium poppy is also grown locally for the domestic market. However, with increased support from international organizations such as the UNODC and collaboration with US, Russian, EU, and Afghan authorities, some headway in the battle against illicit drug trafficking is being made. Tajikistan ranks third in the world in terms of heroin and raw opium confiscations (1216.3 kg of heroin and 267.8 kg of raw opium in the first half of 2006). According to some analysts, drug money corrupts the country’s administration; well-known individuals who fought on both sides of the civil war and had positions in the government after the ceasefire was reached are now engaged in the drug trade. The UNODC is collaborating with Tajikistan to improve border crossings, offer training, and establish joint interdiction teams. It also aided in the establishment of the Tajikistani Drug Control Agency.
Tajikistan is an active member of the Organization for Economic Cooperation and Development (ECO).