In 1994, Russia's refusal to export Turkmen gas to hard currency markets and mounting debts of its major customers in the former USSR for gas deliveries contributed to a sharp fall in industrial production and caused the budget to shift from a surplus to a slight deficit. Industrial production of gas fell sharply, putting the budget into deficit--a deficit which has since continued to rise sharply. Currently, Turkmenistan is heavily dependent on Russian pipelines to reach markets in Europe; because oil and gas account for one-third of Turkmenistan's budget revenues, Turkmenistan is working to open new gas export corridors through Iran and under the Caspian Sea into Turkey. Privatization goals remain limited. After Russia's refusal to transport Turkmenistan's gas, a difficult investment environment, high rates of inflation, and heavy government regulations made further economic progress unlikely.
In the absence of gas revenues, Turkmenistan turned to the export of cotton, but poor harvests had weak economic returns. In 1996 the economy bottomed out, and inflation rates continued to climb. Although the government avoided privatization, it attempted to fix the situation by creating a stabilization program aimed at a unified and market-based exchange rate, the allocation of government credits by auction, and strict limits on budget deficits. However, partial price liberalization, the end of subsidies from Moscow, and poor control over fiscal and monetary aggregates contributed to the high rates of inflation and significant drops in living standards. Despite these conditions, official statistics for 1998 indicated improvements in Turkmenistan's economy, though Turkmenistan still faced revenue shortfalls due to the continued lack of adequate export routes for natural gas and obligations on extensive short-term external debt. . In September 1998 Turkmenistan began exporting gas to Iran via its first pipeline not crossing Russian territory.
The Turkmen Government claims to have placed great emphasis on foreign economic relations and foreign trade and an "open door" trade policy, as declared by the President. At present 73 countries are partners of Turkmenistan, including the republics of the NIS. The most prominent trade partners of Turkmenistan are the United States, Turkey, Switzerland, Hong Kong, Germany, Great Britain, Cyprus, Iran, and the United Arab Emirates.
Export of industrial and agricultural raw materials remain the most important goals of the Turkmen Government. Price controls on most goods, the stabilization of reproduction processes, the creation of stable economic growth, and flexibility to innovations and a socially oriented economy also are very important. The government is attempting to strengthen state regulation of foreign trade and create a state system of insurance to expand and consolidate foreign economic relations. Because of considerable growth of foreign investments, structural improvements are taking place in the economy. Privatization and structural reform of medium and large enterprises are proceeding slowly. In early 1999, Turkmenistan's foreign debts totaled more than 75% of GDP. Prospects in the near future are discouraging because of widespread internal poverty and the burden of foreign debt. IMF assistance would seem to be necessary, yet the government is not as yet ready to accept IMF requirements. Turkmenistan's 1999 deal to ship 20 billion cubic meters (bcm) of natural gas through Russia's Gazprom will help alleviate the 2000 fiscal shortfall, but will not make up for the absence of meaningful progress in economic reform.
GDP: purchasing power parity - $21.5 billion (2001 est.)
GDP - real growth rate: 10% (2001 est.)
GDP - per capita: purchasing power parity - $4,700 (2001 est.)
GDP - composition by sector:
agriculture:
27%
industry:
45%
services:
28% (2000 est.)
Population below poverty line: NA%
Household income or consumption by percentage share:
lowest 10%:
2.7%
highest 10%:
26.9% (1993)
Inflation rate (consumer prices): 10% (2001 est.)
Labor force: 2.34 million (1996)
Labor force - by occupation: agriculture and forestry 44%, industry and construction 19%, other 37% (1996)
Unemployment rate: NA%
Budget:
revenues:
$588.6 million
expenditures:
$658.2 million, including capital expenditures of $NA (1999 est.)
Industries: natural gas, oil, petroleum products, textiles, food processing
Industrial production growth rate: NA%
Electricity - production: 9.256 billion kWh (2000)
Electricity - production by source:
fossil fuel:
99.94%
hydro:
0.06%
nuclear:
0%
other:
0% (1998)
Electricity - consumption: 7.708 billion kWh (2000)
Electricity - exports: 900 million kWh (2000)
Electricity - imports: 0 kWh (2000)
Agriculture - products: cotton, grain; livestock
Exports: $2.7 billion f.o.b. (2001 est.)
Exports - commodities: gas 33%, oil 30%, cotton fiber 18%, textiles 8% (1999)
Exports - partners: Ukraine 27%, Iran 14%, Turkey 11%, Italy 9%, Switzerland 5% (1999)
Imports: $1.25 billion (1999 est.)
Imports - commodities: machinery and equipment 45%, chemicals, foodstuffs (1998)
Imports - partners: Ukraine, Turkey, Russia, Germany, US, Kazakhstan, Uzbekistan
Debt - external: $2.1 billion (1999 est.)
Economic aid - recipient: $27.2 million (1995)
Currency: 1 Turkmen manat (TMM) = 100 tenesi
The manat was introduced on November 1, 1993
Exchange rates: Turkmen manats per US$1 - 5,200 (January 2000), 5,350 (January 1999), 4,070 (January 1997), 2,400 (January 1996)
Fiscal year: calendar year