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 turned negative by 3.4% in 2020 as a consequence of the COVID-19 global crisis, a contraction in private consumption and reduced services turnover. In 2021 the economy rebounded (+4.5%) fuelled by increased demand for oil and gas and improved global prices as well as by record wheat harvests that boosted the agricultural sector. The IMF projects growth at 1.7% in 2022 and 2023, as private consumption and the services sector are expected to grow by 5% (Coface).

Concerning public finances, thanks to increased gas export revenues, the budget balance was in surplus in 2021 (0.4%), with a forecast of +0.1% for 2022 (Coface). 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 27% in 2021, and it is expected to follow a downward trend in the forecast period (23.6% this year, 22.1% in 2023 - IMF). Inflation was driven by import restrictions and the resulting shortages, particularly for foodstuffs. The government is trying to control inflation (at 12.5% in 2021) by limiting the amount of cash in circulation and maintaining the official exchange rate at TMT 3.5 per USD. Other measures include price controls and the distribution of some foodstuffs at subsidised prices. However, inflation is expected to accelerate to 13% this year, before easing to 10% in 2023 (still above its pre-pandemic level). 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 2019 was 7.6% as per the Asian Development Bank. According to figures from the World Bank modelled on estimates from the International Labour Organisation, the unemployment rate rose to 4.4% in 2020, from 3.7% a year earlier (latest data available). About 90% of the active population is employed in the public sector.

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: February 2023