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Turkmenistan’s economy remains stable to regional market turbulence

6 April 2015 12:55 (UTC+04:00)
Turkmenistan’s economy remains stable to regional market turbulence

By Sara Rajabova

The International Monetary Fund said Turkmenistan’s economy remained resilient to regional market turbulence over the last year, supported by strong hydrocarbon exports and public investment.

“Real GDP growth reached 10.3 percent and CPI inflation was contained to an average six percent in 2014 in spite of tariff hikes for utilities and transportation,” the IMF said in a message on April 4.

The Fund added that the authorities in Turkmenistan have taken pro-active measures to increase resilience in a difficult external environment.

“After having maintained a parity of 2.85 manat to the dollar since May 2008, the authorities devalued by 22 percent in January with a view to lessen the pressures from depreciating currencies in the region on domestic firms,” according to the message.

The report also said initiatives to help contain inflation, including privatization of small-scale agriculture, and support for export and import-substituting firms have complemented the devaluation.

IMF also added that in 2015, real GDP growth is projected to decelerate to 9 percent on the back of declining natural gas export revenues and lower public investment as a share of GDP.

The Asian Development Bank also predicted the slow GDP growth in Turkmenistan in 2015 and 2016, saying will continue further if external difficulties persist and require fiscal adjustment.

“In spite of the recent devaluation, inflation is expected at 6 to 6.5 percent on an end-of-year basis (7 to 8 percent on average) owing to a projected further fall in global food prices as well as US dollar - and hence manat – appreciation,” according to IMF.

IMF said the key external risks to this relatively benign outlook include permanently lower oil and natural gas prices; lower-than-expected natural gas export volumes to China or Russia; and further significant strengthening of the U.S. dollar that could hurt Turkmenistan’s real exchange rate.

IMF added that the large sovereign foreign assets provide a buffer to help mitigate the impact of any shocks for several years.

Turkmenistan is one of the key players on the energy market in the Caspian region and Central Asia. It supplies gas to China, Iran and Russia. The country, in terms of its gas reserves, ranks fourth in the world.

Energy-rich Turkmenistan possesses 0.6 billion barrels of proven oil reserves and 618.1 trillion cubic feet of proven natural gas reserves, according to Business Insider.

Despite Turkmenistan’s large natural gas reserves, its development has been limited due to insufficient pipeline infrastructure. The country has tried to mitigate that issue by creating a more business-friendly environment that allows foreign companies to take on joint-ventures with the state-run oil and natural gas companies.

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Sara Rajabova is AzerNews’ staff journalist, follow her on Twitter: @SaraRajabova

Follow us on Twitter @AzerNewsAz

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