The economic growth in Turkmenistan has been characterized by the great volatility.
ACRA, a Russia-based analytical credit rating agency, published a research brief titled “Between the East and West” which analyzes the economic trends of the five Central Asian countries: Turkmenistan, Kazakhstan, Uzbekistan, Tajikistan, and Kyrgyzstan. All of them experience climate change, rapid population growth, low diversification of exports and the high dependence on external economic factors.
Key Economic Factors for Turkmenistan:
- Currency and Banking System: Due to restrictions on currency purchases, the country experiences varying exchange rates that can differ significantly. The banking system in Turkmenistan is relatively developed, with total assets of the country’s banks representing around 75% of GDP by 2023.
- Economic Growth and Inflation
- GDP Growth: Turkmenistan’s GDP grew by 2.46% in 2022, according to data from the IMF and ACRA’s own calculations.
- Inflation: The Consumer Price Index (CPI) was 5.90% in 2022, based on the same sources (IMF and ACRA’s calculations).
- Source of Budget Revenues: The majority of Turkmenistan’s budget revenues come from the production and export of natural gas. Industrial production contributes to half of the country’s GDP, with the gas production sector being the primary driver.
- Economic Instability and Risks: The economy is highly vulnerable to fluctuations in oil and gas prices leading to economic instability and higher risks. However, the government’s budget is typically balanced, which helps limit the potential for increasing national debt. As of the end of 2023, Turkmenistan’s national debt is expected to remain relatively low, at approximately 4.3% of GDP.
- Major Trading Partners: Turkmenistan’s key trading partners include China, Turkey, Iran, the UAE, Italy, Afghanistan, and Russia. In 2023, the country expressed plans to develop a trans-Caspian gas pipeline toward Europe to expand gas exports, though the project may take several years to complete. Additionally, Turkmenistan is looking to boost tourism (with a focus on Russian visitors) and enhance port facilities on the Caspian coast.
- Focus on Gas and Oil Production: Turkmenistan is working to increase gas production. The government’s oil and gas development program aim to produce 250 billion cubic meters of gas annually by 2030 (up from 80 billion cubic meters in 2023) and 110 million tons of oil per year (currently 8 million tons in 2023). The country holds the fourth-largest natural gas reserves in the world.
