Gurbanguly Berdimuhamedov grew to become the president of Turkmenistan in February 2007 following the demise of the nation’s first president, Saparmurat Niyazov. Berdimuhamedov served as president for 15 years, till February 2022 when his son, Serdar, ascended to the presidency. The economic system of Turkmenistan grew exponentially throughout the first a part of Berdimuhamedov’s presidency from 2007 to 2014 attributable to the next quantity of fuel exports, in addition to record-breaking excessive fuel costs, which helped generate billions of {dollars} from exports. The nation’s financial output has considerably declined since 2015 attributable to decrease costs of pure fuel and the discontinuation of fuel exports to Russia and Iran. The second a part of Berdimuhamedov’s presidency was marked by financial disaster, inflation, and hovering black-market alternate charges.
Macroeconomic Indicators
The nominal GDP of Turkmenistan beneath the presidency of Berdimuhamedov grew from $12.66 billion in 2007 to $45.23 billion in 2019, in accordance with World Financial institution figures. GDP development charges haven’t been up to date on the Financial institution’s web site since 2020 attributable to a scarcity of dependable information of satisfactory high quality. GDP development was uninterrupted from 2007 to 2014, then dropped sharply and recovered solely by 2019.
Moreover, the GDP of Turkmenistan is calculated within the native foreign money, the manat, and reported in U.S. {dollars} primarily based on the official alternate charge. Turkmenistan has two parallel alternate charges: the official alternate charge ($1=3.5 manat) and the black market alternate charge ($1=19.5 manat). Due to this fact, one can assume that the precise GDP of the nation could be utterly completely different — and much decrease — had it been reported primarily based on the black market alternate charge.
The Good Outdated Alternate Charge Drama
The black-market alternate charge just isn’t the product of Berdimuhamedov’s presidency, its introduction stretches again to the period of the primary president, Niyazov (additionally known as Turkmenbashy, which means “The chief of Turkmens”). Promoting and shopping for foreign currency echange was forbidden throughout the Niyazov period beginning in 1998 and such restrictions had been lifted within the second 12 months of Berdimuhamedov’s presidency in 2008. Albeit with some restrictions on the quantity of greenback alternate, the alternate of currencies was largely allowed to all residents. The alternate charge was set at a hard and fast charge, first at 2.8 manat/$1, and later at 3.5 manat/$1. Because of this, dwelling requirements improved within the nation due to a budget alternate charge, which helped common residents afford imported automobiles, electronics, and different merchandise.
Nevertheless, the free alternate of currencies has been severely restricted since 2016 as a result of decrease variety of arduous currencies coming into the nation, which was a results of declining costs of pure fuel and the discontinuation of fuel exports to Russia and Iran. Restrictions on the free alternate of currencies paved the best way for the rise of yet one more black market alternate charge in Turkmenistan however this time beneath the presidency of Berdimuhamedov. The black market charge reached as much as 40 manat/$1 in April 2021, which was 11 occasions costlier than the official alternate charge. Then it began to slowly decline and reached round 19.5 manat as of writing, which remains to be 5 occasions costlier in comparison with the official alternate charge.
In relation to salaries, the 2022 minimal month-to-month wage within the nation is 1,050 manat and the typical month-to-month wage is 2,040 manat. Utilizing the official alternate charge, these figures equal $299.69 and $582.26, respectively; however beneath the black-market charge they’re price solely round $54 and $105. It’s an unlimited distinction.
Excessive Inflation
Because of the rising black market alternate charge, every thing grew to become costlier, and inflation soared within the nation. Turkmenistan has not but undergone full industrialization and home manufacturing is just too low to satisfy the calls for of shoppers. Because of the low-cost alternate charge within the first half of Berdimuhamedov’s presidency, the nation largely imported nearly all of its shopper merchandise.
Though the federal government doesn’t publicly share any information relating to inflation charges within the nation, one can glean details about inflation in Turkmenistan from worldwide organizations, lecturers, and various third-party sources. IMF’s forecasted inflation charge within the nation ranges from 6 p.c to 21 p.c for the interval between 2016 and 2021, whereas Steve Hanke from John Hopkins College assessed the inflation charge in Turkmenistan from 50 p.c in 2017 to 350 p.c in mid-2018 and again to 50 p.c in 2021. The “Palaw Index” from Progres.on-line measures month-to-month inflation in Turkmenistan by monitoring the worth of components for the well-known Turkmen dish palaw similar to sunflower oil, beef, onions, carrots, rice, and flour. In line with the Palaw Index, year-on-year inflation was 45 p.c in January, 20 p.c in February and 16 p.c in March of 2022.
Supply: Hanke’s Inflation Satellite tv for pc
Conclusion
The start of Berdimuhamedov’s presidency was marked by excessive financial development attributable to excessive fuel costs and bigger volumes of exports till 2014. Nevertheless, as a substitute of investing the additional income gained by means of fuel exports in these years towards well being, training, and arduous infrastructure, the federal government wasted nearly all the income on constructing monuments, airports, luxurious resorts, and the underused Awaza vacationer zone, in addition to internet hosting the AIMAG. Regardless of excessive development to start with, excessive inflation and a hovering black-market alternate charge grew to become the legacies of Berdimuhamedov’s time in workplace.
