Declining energy prices and currency devaluation mean that Turkmenistan’s economic growth is forecast to reach 9.5% in 2015 and 9.2% in 2016, while inflation is expected to be 7.0% in 2015 and 6.5% in 2016.
|Selected economic indicators (%)||2015||2016|
|ADO 2015||Update||ADO 2015||Update|
|Current Account Balance (share of GDP)||-8.4||-8.4||-6.2||-6.2|
Source: ADB estimates.
Turkmenistan’s economic growth in the first half of 2015 was reported at 9.1%, lower than in the first half of 2014. Growth was driven by expansion in industry by 6.2%, construction by 12.1%, agriculture by 11%, and services by 11.6%. On the demand side, a 7.9% rise in investment was the main driver of growth.
The Central Bank of Turkmenistan moved to limit inflation in the first half of 2015. Despite some food price increases and the devaluation of the Turkmen manat on 1 January 2015, price controls have also restrained inflation.
For the year as a whole, the decline in global energy prices is projected to reduce export earnings and somewhat slow the pace of investment. However, strong fiscal and external buffers will help support growth in a difficult external environment. Accordingly, the Asian Development Outlook 2015 Update slightly reduces the forecast for growth in 2015 but maintains the forecast for slower growth in 2016.
The inflation forecast for 2015 is maintained in light of the pass-through effects of manat devaluation and lower state subsidies for electricity, fuel, and public transportation that will bring marginally higher prices for food, construction materials, services, and public utilities. Inflation in 2016 is expected to moderate slightly, as forecast in ADO 2015.
Declining energy prices are expected to reduce export receipts despite a higher volume of gas exports to satisfy gas contracts with the PRC. Under the current scenario of low prices for hydrocarbons, the ADOU 2015 maintains the forecast for the current account deficit widening in 2015 and subsequently narrowing in 2016 with some recovery in oil and gas prices.
Excerpted from the Asian Development Outlook 2015 Update.