Country Report Turkmenistan January 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. The outlook for the external economic environment has deteriorated sharply, leading us to cut our real GDP growth forecast to an annual average of 2.5% in 2009-10. However, the current account will retain a large surplus.

The political scene

An election to the Mejles (parliament) was held on December 14th 2008, following constitutional changes to boost its formal powers. However, the vast majority of candidates contesting the election were from the Democratic Party of Turkmenistan, the "party of power". Turkmenistan has received muted international criticism of its human rights record. Western governments and energy companies have continued to court Turkmenistan, but the country has remained loth to commit itself to the proposed Nabucco gas pipeline.

Economic policy

Official concern has increased over the potentially negative impact on the Turkmen economy of the global financial and economic crisis. A stabilisation fund has been established to help to cushion the impact, and the government is to review the 2009 budget and the country's import needs. The domestic currency was redenominated on January 1st 2009, at 5,000 old manat equal to 1 new manat. A balanced state budget has been adopted for 2009.

The domestic economy

Official data show a pick-up in real GDP growth to 8.9% year on year in January-October 2008 from 7.5% in January-July, although it is unclear what drove the acceleration. An international audit has confirmed that the South Yolotan-Osman hydrocarbons fields could be among the largest in the world. Gas exports to China, due to begin in 2009, have been delayed. Although the details of the deal are lacking, gas export revenue is expected to increase, at least in 2009, on the basis of a gas supply agreement with Russia.

Foreign trade and payments

We estimate that the trade in goods surplus rose by 70% in 2008, to US$7.1bn, owing to higher gas export prices. We have raised our estimates of the current-account surplus since 2005 owing to new historical data from the European Bank for Reconstruction and Development (EBRD).

This report covers the following industry codes:
SIC Code: 49
NAICS Code: 22

This report covers the following industry codes:
SIC Code: 49
NAICS Code: 22