Country Report Turkmenistan April 2009

Outlook for 2009-10

The president, Gurbanguly Berdymukhamedov, is not expected to liberalise significantly the authoritarian political system of his predecessor, Saparmurad Niyazov. He will preserve Mr Niyazov's statist economic policies, albeit with greater willingness to contemplate minor reforms. Russia will remain Turkmenistan's main foreign partner, but stronger ties with other countries will be pursued in the interests of developing the hydrocarbons sector. In the light of the extremely unfavourable external economic environment, the Economist Intelligence Unit expects real GDP to grow by just 1% in 2009, before a pick-up to 4% in 2010. However, the current account will retain a large surplus.

The political scene

Mr Berdymukhamedov has carried out a large personnel reshuffle and removed from office some of the last remaining figures from the Niyazov era. The president's nominees for the positions of speaker and committee heads in the new Mejles (parliament) have all been approved. Mr Berdymukhamedov has visited Iran and Uzbekistan, in a reflection of improving ties, although tensions with Iran remain. A visit to Russia by Mr Berdymukhamedov failed to deliver progress on gas prices and pipelines.

Economic policy

The authorities claim to have undertaken a number of measures to prevent the global economic crisis from hitting Turkmenistan. Mr Berdymukhamedov has highlighted the struggling agriculture sector as being in need of greater reforms. The announcement of an international tender to build a domestic gas pipeline suggests that the Turkmen authorities may be concerned over the impact of the economic downturn in Russia on its investment in Turkmenistan.

The domestic economy

We estimate that real GDP grew by 3% in 2008, well below the officially reported figure of 10.5%. Natural gas output fell by 2.4% in 2008, whereas output of crude oil and gas condensate rose by 5%. China National Petroleum Corporation (CNPC) has denied reports that Turkmenistan will postpone the start of gas exports to China through a new pipeline, due to become operational in late 2009.

Foreign trade and payments

The trade in goods surplus is estimated to have risen to over US$6bn in 2008, from US$4.3bn in 2007, largely owing to a 40% rise in the price of gas exports. Turkmenistan's overseas deposits continued to grow in 2008, reflecting rising gas export revenue.

This report covers the following industry codes:
SIC Code: 60;1;15
NAICS Code: 52;11;23