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- GDP (PPP):
- $95.5 billion
- 6.5% growth
- 8.8% 5-year compound annual growth
- $17,485 per capita
- Inflation (CPI):
- FDI Inflow:
Turkmenistan’s economic freedom score is 47.1, making its economy the 169th freest in the 2018 Index. Its overall score has decreased by 0.3 point, with lower scores for the property rights and government integrity indicators exceeding a modest improvement in monetary freedom. Turkmenistan is ranked 42nd among 43 countries in the Asia–Pacific region, and its overall score is well below the regional and world averages.
The autocratic governments in power since Turkmenistan’s independence have done little to improve the business climate, privatize state-owned industries, or combat rampant corruption. Public discontent was mitigated by lavish utility subsidies and extensive state-funded development and social spending. Because of deteriorating fiscal conditions due to lower oil prices, these subsidies have been cut. Currency depreciation, autarkic policies, and limited spending on public services have led to economic stagnation. Rigid labor regulations and the nearly complete absence of property rights further limit private-sector activity.
Turkmenistan became a Soviet republic in 1924 and gained independence in 1991. In February 2017, President Gurbanguly Berdymukhammedov won a third five-year term with 97 percent of the vote in elections that international observers regarded as flawed. The president tightly controls the judiciary, the legislature, the economy, social services, and the mass media. His policies are somewhat more open to the world than those of his predecessor, the late 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.
Contracts and property rights are not enforced effectively. 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. Laws are poorly developed, and judges are poorly trained and open to bribery. Corruption is widespread in the security forces and in all social and economic sectors.
The personal income tax rate is a flat 10 percent, and the corporate tax rate is 8 percent. Other taxes include value-added and property taxes. The overall tax burden equals 15.6 percent of total domestic income. Over the past three years, government spending has amounted to 16.1 percent of total output (GDP), and budget deficits have averaged 0.4 percent of GDP. Public debt is equivalent to 23.9 percent of GDP.
An opaque regulatory framework hinders business freedom. In 2016 and 2017, officials or their agents seized many private companies, jailed their owners under vague security-related legal pretexts, and then reopened the businesses under new ownership. The public sector accounts for 70 percent to 80 percent of employment. The president says he wants to end the long-standing practice of providing free gas, electricity, and water to citizens.
Trade is extremely important to Turkmenistan’s economy; the combined value of exports and imports equals 118 percent of GDP. The average applied tariff rate is 0.0 percent. Nontariff barriers significantly impede trade. The government screens new investment, and bureaucratic and regulatory barriers impede foreign investment. The state controls the financial system, and 90 percent of all loans are directed to state-owned enterprises.