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Economy

South Ossetia's economy is primarily agricultural, although less than 10% of South Ossetia's land area is cultivated. Cereals, fruit and vines are the major produce. Forestry and cattle industries are also maintained. A number of industrial facilities also exist, particularly around the capital, Tskhinvali. Following the war in the 1990s, South Ossetia struggled economically. South Ossetian GDP was estimated at US$15 million (US$250 per capita) in a work published in 2002. In 2017, the Administration of South Ossetia estimated its GDP to be nearly 100 million US dollars. South Ossetia's poverty threshold stood at 3,062 rubles a month in the fourth quarter of 2007, or 23.5 per cent below Russia's average, while South Ossetians have incomparably smaller incomes.

The majority of the population survives on subsistence farming. The South Ossetian authorities planned to improve finances by boosting the local production of flour and thus reducing the need for flour imports. For this purpose, the area planted with wheat was increased tenfold in 2008 from 130 hectares to 1,500 hectares. The wheat harvest in 2008 was expected to be 2,500 tons of grain. The South Ossetian Agriculture ministry also imported some tractors in 2008, and was expecting delivery of more farm machinery in 2009.

Before the 2008 Russo-Georgian War, South Ossetia's industry consisted of 22 small factories, with a total production of 61.6 million rubles in 2006. In 2007, only 7 factories were functioning. In March 2009, it was reported that most of the production facilities were standing idle and were in need of repairs. Even successful factories have a shortage of workers, are in debt and have a shortage of working capital. One of the largest local enterprises is the Emalprovod factory, which has 130 employees. Additionally, after the 2008 war, Georgia cut off supplies of electricity to the Akhalgori region, which aggravated the socio-economic situation in that area.

By the end of 2021, the number of employed people was determined at 20,734 while 2,449 persons were registered as unemployed, on a total working age population of 34,308 (men 18–65, women 18–60). Virtually the only significant economic asset that South Ossetia possesses is control of the Roki Tunnel that is used to link Russia and Georgia, from which the South Ossetian government reportedly obtained a large part of its budget by levying customs duties on freight traffic before the war.

Since the 2008 war, South Ossetia and its economy are critically dependent on Russian economic assistance, and a year after the war, former President Edurard Kokoity was grateful for the Russian aid for reconstruction work. According to reports Russian donations made up nearly 99% of the budget of South Ossetia by 2010. By 2021 this has been reduced to 83%. A new backup power transmission line running from Russia to South Ossetia was put into operation in November 2021, helping to ensure uninterrupted power supply to the region. It cost more than 1.3 billion rubles ($17m) to construct and was built within the framework of the Russian Investment program in South Ossetia.

In 2016, Armenia tried to persuade Georgia to open a transit route between Georgia and South Ossetia, but Georgia refused.

The socio-economic development program of South Ossetia for the 2022–2025 period is financed by Russia.The Aim of the program is for South Ossetia to reach the socio-economic indicators of the North Caucasus Federal District in 2025.