The growth in Central Asian will decelerate in 2019 after pick up in 2018, according to Asian Development Outlook-2019, ADB’s flagship report.
Average growth in the sub-region [comprising Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan] rose from 4.2% in 2017 to 4.4% last year is projected to slow down to 4.2% in both 2019 and 2020 with lower average oil prices trimming expansion in Kazakhstan, and despite improvement in Azerbaijan, Georgia, the Kyrgyz Republic, and Uzbekistan.
Inflation is expected to decrease further to 7.8% in 2019 and 7.2% in 2020 with further tightening of fiscal policy in Turkmenistan and monetary policy in Kazakhstan, as well as slower credit growth in Uzbekistan.
Here are the highlights of the report’s part, devoted to Turkmenistan:
- The government reported GDP growth at 6.2% in 2018, down from 6.5% a year earlier. On the supply side, the hydrocarbon industry expanded by 6.0%, well up from 1.7% in 2017.
- From preliminary estimates, industry growth accelerated from 5.4% in 2017 to 6.0%. Gains in hydrocarbons were partly offset by slower expansion in construction. Growth in services slowed from 7.9% to 6.8% with less expansion in construction and despite strong performances in trade, transport, and communications. Agriculture growth is estimated to have slowed from 5.9% in 2017 to 4.8% as adverse weather affected harvests of strategic crops, notably cotton and wheat.
- For inflation indicator, ADB refers to IMF estimates at 9.4%, up from 8.0% in 2017. With slower growth, inflation is likely to decelerate slightly but remain near double digits. The government is expected to continue its efforts to curtail inflation by maintaining a fixed exchange rate and administrative price controls, supporting import substitution, and limiting foreign exchange conversion.
- Although credit growth slowed from 17.0% in 2017 to 12.0%, lending remained sizable at the equivalent of 60% of GDP, mostly subsidized credit to state-owned enterprises in priority sectors to facilitate import substitution and promote exports.
- The state budget deficit is estimated to have narrowed from the equivalent of 2.8% of GDP in 2017 to 0.9%, reflecting fiscal consolidation that reduced capital spending and cut subsidies under major subsidy reform.
- The non-hydrocarbon fiscal deficit narrowed from 7.7% of GDP in 2017 to 5.5%.
- Export revenue rose in 2018 on recovery in global hydrocarbon prices and increased demand for gas from China. This and import restrictions narrowed the current account deficit from 11.5% of GDP in 2017 to an estimated 8.2%.
- Estimated growth in exports soared from 6.3% in 2017 to 26.0%, while imports expanded by 9.3% following an 18.0% drop in 2017.
- FDI inflows in 2018 were estimated at $1.5 billion, most of it for oil, gas, and chemical production.
- Further recovery in hydrocarbons is expected to help industry expand by 6%–7%, supported by gains in agricultural processing, light industry and food products, construction materials, and chemicals, which are all targets for import substitution.
- With announced government support for farmers, agriculture is forecast to expand by 4% in both years, while services are projected to grow by 5%–6% annually.
- The government aims to continue support for social services, with over 70% of budget expenditure going for such outlays plus wages, pensions, and stipends.
- Contracts for larger gas shipments are forecast to lift merchandise exports by 14.0% in 2019 and 10.0% in 2020.
- With the completion of large projects that require imports of advanced equipment and services, the current account deficit is expected to narrow to 5.7% of GDP in 2019 and 3.4% in 2020. /// nCa, 4 April 2019
Full report “Asian Development Outlook-2019” is available here: