Turkmenistan: Economic Outline

Economic Indicators

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. The IMF estimates that post-pandemic growth surged to 5.3% in 2022 before easing to 2% in 2023. The economy is anticipated to grow by approximately 2.3% in 2024 and in the medium term. Growth in hydrocarbon production is forecasted to stabilize at around 2%, while non-hydrocarbon growth is expected to stay muted. This is attributed to several factors including the challenging geopolitical and business landscape, investment inefficiencies, significant overvaluation of the real exchange rate, and regulatory burdens that exceed international standards (IMF).

In 2023, the state budget surplus decreased by 0.4 percentage points to 0.6% of GDP, with tax revenue declining by 2.2%, notably including a 21% decrease in natural resource tax receipts. This decline in revenue is attributed to the nature of gas exports, which are governed by long-term contracts frequently linking revenue to oil prices. Meanwhile, expenditure increased by 1.9%, and capital expenditure from the state budget rose to 0.7% of GDP. Fitch predicts that the fiscal surplus will further narrow to 0.1% of GDP in 2024 and transition into a deficit of 0.5% in 2025, reflecting the impact of lower energy prices. Public debt decreased to 4.3% of GDP by the end of 2023, down from 10% at the end of 2021, and Fitch anticipates a further decline to 3.5% by the end of 2025. The Turkmenistan Stabilisation Fund (TSF), which is entirely denominated in local currency, increased by TMT 5.5 billion in 2023, reaching TMT 32 billion, of which TMT 17.2 billion (equivalent to 6.1% of GDP) represented fiscal reserves held at the central bank. In 2022, disinflation briefly shifted to deflation in 2023 due to the decline in global commodity prices, tightening of monetary policy, and easing of exchange rate pressures. However, inflation started to rise again in the latter half of 2023. The current account surplus decreased from 7% of GDP in 2022 to 4.8% in 2023. As per the IMF, inflation is projected to gradually rise to 8% due to the long-standing policy of increasing public sector wages and pensions by 10% annually and looser monetary conditions. As recommended by the IMF, it is crucial to promptly implement reforms in public financial management and state-owned enterprises (SOEs). This involves executing the 2014 Budget Code, which has been postponed, to establish a unified treasury account, operationalize medium-term budgeting, and enhance fiscal reporting and transparency. Additionally, the authorities should expedite enhancements in SOEs' corporate governance, which includes strengthening independent oversight functions and promoting transparency by mandating the publication of audited financial statements.

Official data on poverty and unemployment are questionable and dated, whereas the proportion of the employed population below USD 2.15 a day (PPP) in 2023 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 4.1% in 2023, 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 19,929 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: May 2024