Turkmenistan: Economic Outline

Economic Indicators

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Turkmenistan is a predominantly desert country, sparsely populated (population density is ten people per square kilometre), and its economy depends mostly on agriculture (mainly cotton), oil, and natural gas (fourth-largest natural gas reserves in the world, representing about 10% of global reserves). Turkmenistan's economy enjoys regular revenues from hydrocarbons and limited exposure to international financial markets. GDP growth averaged 0.8% in the period 2016-2021: after contracting by 3% in 2020, it rebounded to +4.6% in 2021 and was estimated at +1.2% in 2022 by the IMF (2.4% according to Fitch Ratings and 6.2% as per official governmental figures). Particularly, the industrial sector expanded by 6.3%, the trade sector by 8.9% and agriculture by 5.7%; whereas gas production declined by 1.8% to 82.3 bcm, reflecting a near halving of exports to Russia. A combination of factors such as increased capital expenditure, the ongoing effects of reopening, government support for the private sector, a slight rise in gas production, and continued strong demand for downstream products should push growth just below 2.5% in 2023 and 2024 (IMF).

Concerning public finances, thanks to increased oil & gas revenues (+80% y-o-y), in 2022 the budget balance was in surplus for the first time since 2014 (by 1% of GDP). During the forecast period, revenue should remain robust due to the delayed pass-through embedded in energy contracts and persistently high prices, resulting in an increase in capital spending. Therefore, the surplus is expected to expand to 1.4% of GDP in 2023 before returning to a small deficit the following year. Such performances should allow for the timely repayment of obligations relating to the country’s external debt, which is almost fully sovereign. The debt-to-GDP ratio is low, at around 8.4% as of 2022, and is forecast to fall further over the forecast horizon (to 5.9% by 2024 – IMF). Inflation spiked in 2022, reaching an average of 17.5%, but eased to mid-single digits at end-year, reflecting price controls, more restrictive credit policy and base effects. The IMF forecasts the rate to gradually ease to 10.5% this year and 7,5% in 2024. Despite its status as a middle-income country, Turkmenistan is still at an early stage of transition to a market economy, requiring reforms such as price and trade liberalization, privatization and the creation of market regulatory institutions. The public sector and state monopolies continue to dominate the economy and the informal labour market is important. Strict administrative controls and the important role of the public sector in economic activity remain the main obstacles to private sector development. Overvaluation of the Turkmen manat and foreign currency rationing dampen foreign investment and reduce the competitiveness of non-hydrocarbon exports. President Berdymukhamedov holds power since 2006: in what has been seen as a move to consolidate his power, from January 2021 the Parliament transitioned from unicameral to bicameral after a constitutional reform.

Official data on poverty and unemployment are questionable and dated, whereas the proportion of the employed population below USD 1.90 a day (PPP) in 2021 was only 0.5% as per the Asian Development Bank's latest data. According to figures from the World Bank modelled on estimates from the International Labour Organisation, the unemployment rate was stable at 4.8% in 2021 (latest data available), with a consistent part of the active population being employed in the public sector. The country's GDP per capita (PPP) was estimated at USD 19,974 in 2023 by the IMF.

Monetary Indicators	2016	2017	2018	2019	2020
Turkmenistan Manat (TMM) - Average Annual Exchange Rate For 1 GHS	0.88	0.95	0.90	0.67	0.63

Source: World Bank - Latest available data.

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Latest Update: September 2023