2017 Index of Economic Freedom

Turkmenistan

overall score47.4
world rank170
Rule of Law

Property Rights32.4

Government Integrity29.6

Judicial Effectiveness5.0

Government Size

Government Spending92.3

Tax Burden95.3

Fiscal Health98.9

Regulatory Efficiency

Business Freedom30.0

Labor Freedom20.0

Monetary Freedom74.8

Open Markets

Trade Freedom80.0

Investment Freedom0.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 5.9 million
  • GDP (PPP):
    • $88.6 billion
    • 6.5% growth
    • 10.6% 5-year compound annual growth
    • $16,445 per capita
  • Unemployment:
    • 10.0%
  • Inflation (CPI):
    • 5.5%
  • FDI Inflow:
    • $4.3 billion
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The government of Turkmenistan’s heavy involvement in leading economic sectors has dampened private-sector dynamism and led to economic stagnation in nonhydrocarbon sectors. The government restricts foreign investment to a few handpicked partners, and under the state-controlled financial system, access to credit is limited to political favorites. Burdensome and opaque regulatory systems, the nearly complete absence of property rights, pervasive corruption, and rigid labor regulations further limit private-sector activity.

While diversification will require the end of state control in several sectors, Turkmenistan’s current competitive tax rates and open trade regime provide a practical base for sustainable long-term growth.

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Background

In 2012, President Gurbanguly Berdymukhammedov won a second five-year term with 97 percent of the vote in elections that international observers regarded as flawed. The presidency tightly controls the judiciary, the legislature, the economy, social services, and the mass media. Berdymukhammedov’s policies are somewhat more open to the world than those of his predecessor, President-for-Life Saparmurad Niyazov, but the government still tends toward isolationism. Turkmenistan has intensive agriculture in irrigated oases, sizable oil resources, and the world’s sixth-largest reserves of natural gas. Berdymukhammedov has encouraged some foreign investment in the energy sector, especially from Russia, China, and Iran. Turkmenistan’s economy has been negatively affected by the economic slowdown in Russia.

Rule of LawView Methodology

Property Rights 32.4 Create a Graph using this measurement

Government Integrity 29.6 Create a Graph using this measurement

Judicial Effectiveness 5.0 Create a Graph using this measurement

All land is owned by the government, and other ownership rights are limited. The judicial system is subservient to the president, who appoints and removes judges without legislative review. The legal system does not enforce contracts and property rights effectively. Laws are poorly developed, and judges are poorly trained and open to bribery. Corruption is widespread, and public officials are often forced to bribe their way into their positions.

Government SizeView Methodology

The personal income tax rate is a flat 10 percent, and the corporate tax rate is 8 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals 17.4 percent of total domestic income. Government spending has amounted to 16 percent of total output (GDP) over the past three years, and budget surpluses have averaged 0.6 percent of GDP. Public debt is equivalent to 23.3 percent of GDP.

Regulatory EfficiencyView Methodology

Regulatory codes remain outmoded, and personal relations with government officials often play a role in overcoming bureaucratic red tape. The bloated public sector provides the majority of jobs, and labor regulations are outdated and not enforced effectively. Although citizens have received gas, electricity, and water free of charge since 1993, regional economic reverberations from deep recession in Russia have forced the state to cut those subsidies.

Open MarketsView Methodology

Trade is important to Turkmenistan’s economy; the value of exports and imports taken together equals 58 percent of GDP. The average applied tariff rate is 0.0 percent, but nontariff barriers impede trade. Private investors may not own land, and state-owned enterprises distort the economy. The government continues to control the financial system, and the flow of financial resources is severely restricted.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Hong Kong89.81.2
2Singapore88.60.8
3New Zealand83.72.1
4Australia810.7
5Taiwan76.51.8
6South Korea74.32.6
7Malaysia 73.82.3
8Macau70.70.6
9Brunei Darussalam69.82.5
10Japan69.6-3.5
11Kazakhstan695.4
12Vanuatu67.46.6
13Thailand 66.22.3
14Philippines65.62.5
15Azerbaijan63.63.4
16Fiji63.44.6
17Tonga633.4
18Indonesia61.92.5
19Kyrgyz Republic 61.11.5
20Cambodia59.51.6
21Bhutan58.4-1.1
22Samoa58.4-5.1
23Tajikistan58.26.9
24China57.45.4
25Sri Lanka57.4-2.5
26Nepal55.14.2
27Solomon Islands558.0
28Bangladesh 551.7
29Mongolia54.8-4.6
30Micronesia54.12.3
31Laos544.2
32Pakistan 52.8-3.1
33India52.6-3.6
34Burma52.53.8
35Vietnam52.4-1.6
36Uzbekistan52.36.3
37Papua New Guinea50.9-2.3
38Kiribati50.94.7
39Maldives50.3-3.6
40Afghanistan48.9N/A
41Turkmenistan47.45.5
42Timor-Leste46.30.5
43North Korea4.92.6
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