Turkmenistan: Economy

Turkmenistan’s gross domestic product (GDP) reportedly rose in the first half of 2014 by 10.3%, which underperformed expectations. On the supply side, a 9.0% expansion in industry was the main factor responsible, as gas output increased by 12.0% and construction by 15.0%. On the demand side, growth was sustained by an 8.3% rise in investment and a 14.7% rise in gas exports. Growth is expected to remain strong, as large public investment projects are implemented and new processing facilities at the Galkynysh gas field raise production. The growth forecast is trimmed marginally to 10.8% in 2014. Then growth is seen accelerating to 11.5% in 2015, rather than slowing as in the Asian Development Outlook (ADO) 2014 projection in April.

Selected Economic Indicators (%) - Turkmenistan 2014 2015
ADO 2014 Update ADO 2014 Update
GDP Growth 11.0 10.8 10.0 11.5
Inflation 6.7 5.8 6.2 6.0
Current Account Balance (share of GDP) 2.0 0.2 2.0 1.5

Source: ADB estimates.

Despite continued rapid growth in domestic demand, the inflation forecast for 2014 is lowered because of reported declines in prices for food and services in the first 5 months of the year. Faster growth in 2015 is expected to nudge inflation up in 2015 but less than forecast in ADO 2014.

Using new facilities at the Galkynysh gas field, exports are expected to rise steadily in 2014 and 2015 to fill long-term gas contracts with the People’s Republic of China (PRC). However, anticipated heavy imports of technological goods and services for the hydrocarbon and construction sectors are expected to hold the current account surplus well below the 2.0% forecast in ADO 2014. For 2015, the forecast of the current account surplus is narrowed by half a percentage point, despite expectations that higher gas exports to the PRC will continue to offset possible declines in demand from the Russian Federation and Iran.

Source: ADB. 2014. Asian Development Outlook 2014 Update. Manila.