ADB: Turkmenistan’s GDP growth in 2021 amounted to 5%, and inflation – 12.5%

The Asian Development Bank (ADB) has published a report with an overview of the current situation and trends in the economies of Asian countries.

The study states that the economic data for Turkmenistan are based on information from international financial institutions such as the IMF, the World Bank, as well as ADB's own estimates. The author of the section on Turkmenistan is Jennet Khodjanazarova , an employee of the local ADB mission in Ashgabat.

According to published data, GDP growth in Turkmenistan in 2021 was 5%, although Ashgabat claims that this figure is 6.2%. GDP growth in 2022 is projected at 6%, in 2023 - 5.8%.

GDP growth per capita was 4% in 2021. In 2022 and 2023, growth will be 5% and 4.8%, respectively. Data on the nominal value of GDP per capita in Turkmenistan, unlike other countries, are not given. There are also no data on the growth rate of value added in industry, agriculture, and the service sector.

It is noted that statistics for Turkmenistan for some years are not included due to the lack of data uniformity (lack of uniformity). In this regard, the years 2017-2020 were not included in the review.

It was possible to achieve GDP growth by increasing gas exports by 42%.

Growth in other sectors of the economy was hampered by restrictions related to the coronavirus pandemic. Nevertheless, growth was observed in the areas of domestic production, the food industry and textiles as part of import substitution programs.

Low rainfall has become a limiting factor in agricultural performance. But here, too, ADB notes an increase in the production of cotton and wheat , although the collection plans have not changed since last year.

The closure of borders and restrictions on the movement of citizens within the country have led to "sluggish growth" in tourism, catering and services.

Investment in the gas sector has been significant, although it has fallen from 39% of GDP in 2017 to an estimated 19% in 2021.

Rising prices and declining incomes have reduced consumption in the private sector.

Inflation in 2021 was 12.5%. This is 2.5% higher than a year earlier.

In 2017, the inflation rate was 8%, in 2018 - 13.2%, in 2019 - 13%, in 2020 - 10%. Projected inflation in 2022 and 2023 will be 13% and 10%, respectively.

Rising inflation is associated with restrictions on currency conversion and an increase in the cost of imported products, as well as domestic products, the production of which depends on imported materials.

To ensure food security, state-run stores delivered rations of basic foodstuffs (vegetable oil, chicken meat, flour, eggs, and sugar) to residents at subsidized prices.

Most of the state subsidies were directed to lending to state-owned companies. The rest were given to private firms producing import-substituting products. Dimensions are not specified.

It is noted that traditionally a significant part of government spending in the social sphere is directed to the construction of infrastructure facilities. In some years, these spending reached half of GDP. At the same time, spending on social protection of citizens, health care and education remained insignificant. In terms of investment in these areas (as a percentage of GDP), Turkmenistan lags far behind the average for countries that are members of the Organization for Economic Cooperation and Development (OECD).

In particular, only 1.2% of GDP goes to healthcare in Turkmenistan (the OECD average is 7.9%), education is 3.5% (the OECD average is 5.1%), and social protection is 3.1%. % (13.3%).

For a speedy recovery from the COVID-19 pandemic, the government is recommended to invest more in human capital development, job creation and more efficient social spending.

Some additional points from the review:

• Turkmenistan has no obligations to Russian creditors and the country is not financially dependent on Russia;

slightly less than 20% of total imports come from Russia, there is no import from Ukraine;

About 20% of the total GDP comes from oil and gas exports, of which gas accounts for about 90%;

Azerbaijan and Kazakhstan, which have operational pipelines, could benefit from the diversification of EU gas imports. Turkmenistan will have to supply oil by tankers through the Caspian until the gas pipeline is built;

• Turkmenistan has the cheapest gasoline among all countries considered in the report - $0.43 per liter of gasoline and $0.39 per liter of diesel fuel. This is cheaper than Brent crude oil;

• Turkmenistan's external debt will decrease to 24% of GDP by the end of 2022 and to 22% next year.

It should be noted that in 2021, the IMF and the WB stopped using the official statistics of the Turkmen government for publication in their studies due to their unreliability.

Last August, Fitch Ratings assigned Turkmenistan a B+ long-term credit rating, but expressed doubts about the reliability of the country's official GDP data.

Source: Chronicles of Turkmenistan