Turkmenistan is officially growing at more than 6 percent per year. Unofficial reports of economic hardship say otherwise.
Sam Bhutia -eurasianet
Anyone who has written about Turkmenistan knows there’s a disconnect between the rosy official growth figures and the reality on the ground. But it’s also hard to reconcile what the International Monetary Fund says – growth over 6 percent for the last four years, for example – and persistent reports of breadlines and economic mismanagement.
One thing the casual observer probably does not know: Those IMF figures are based on data provided by Turkmenistan’s evasive and deeply authoritarian government.
In most countries, a national statistics agency or the central bank provide fairly reliable socio-economic statistics. But in the case of Turkmenistan, official sources are a dead end, a complex labyrinth of PDF files with unreliable figures.
Against this backdrop, it is impossible to get a true picture of how well or poorly the economy is doing. Yet multilateral agencies such as the IMF are compelled to report.
The state plays a major role in Turkmenistan’s economy and is probably the most significant source of investment, a key driver of growth. The state’s revenues are derived, in large part (we can’t say how much, because the government doesn’t report such figures) from the sale of hydrocarbons. So we can at the very least test the official growth figures.
During the 2014-16 slump in global oil prices, Turkmen export earnings dipped sharply, which should obviously have affected government spending. Even IMF data show how export earnings dropped from $12.2 billion in 2015 to $7.5 billion in 2016.
Despite this massive fall in earnings, real GDP growth (as reported by Ashgabat and the IMF) only fell from 6.5 percent in 2015 to 6.2 percent the following year. Although the official/IMF data do show Turkmenistan’s real GDP growth dropping from 10.3 percent in 2014 to 6.5 percent in 2015, they say economic growth has remained close to this level for the past four years.
All oil and gas exporters in the former Soviet Union experienced an economic downturn following the oil-price slump. Russia fell into recession with the economy contracting by 2.3 percent in 2015 and growing by an anemic 0.3 percent in 2016. After growing by an average of 6 percent between 2010-14, Kazakhstan real GDP growth slowed to 1.1 percent in 2015, only recovering in 2017 once oil prices recovered. Azerbaijan’s economy also contracted by 3.1 percent in 2016 and by 0.3 percent in 2017.
A growth rate of more than 6 percent, as Ashgabat and the IMF claim, is a very decent rate for an emerging economy. Yet the number contrasts sharply with reports of continuing economic hardship in Turkmenistan. Independent media reports point to a sustained decline in living standards owing to rampant inflation, little-to-no wage growth, and the rationing of consumer goods. Such an erosion of purchasing power should hit private consumption growth (the amount that households spend) and thus also headline economic growth numbers. That they don’t is no cause for optimism.
Sam Bhutia is an economist specializing in the former Soviet Union.