Análisis de los instrumentos normativos de México

projected to return to 6.5% in 2017 and accelerate to 7.0% in 2018, with some rise in inflation and

a narrower current account deficit as prices for hydrocarbons improve. Private sector development

is key to diversifying growth.

Economic performance

The government reported GDP growth at 6.2% in 2016, slightly below the 6.5% recorded a year earlier (Figure 3.7.1). The slowdown reflected lower global energy prices, weaker demand for hydrocarbons from trade partners, decreasing terms of trade, and a slowing of investment.

On the supply side, Turkmenistan’s large hydrocarbon economy expanded by 2.8%, the same as in 2015. Growth came from the non-hydrocarbon economy, which expanded in 2016 by 6.6%. This was less than last year’s 8.5% as industry, traditionally the country’s key growth driver, expanded by only 1.2%, down from 3.1% in 2015 and 11.4% in 2014 as the contraction in hydrocarbons reduced sector growth. Services grew by 11.0%, improving on last year’s 10.0% with increases of 14.2% in trade, 10.4% in transport and communications, 4.4% in construction services, and 9.7% in other services. Agriculture reportedly grew by 12.0% as the strategic crops cotton and wheat met production targets.

On the demand side, investment drove growth. The International Monetary Fund (IMF) estimated gross investment equal to 39% of GDP in 2016, of which 13 percentage points was foreign direct investment (FDI), mainly for gas, oil, and chemical processing. Growth in consumption, particularly private consumption, was less robust as inflation and currency depreciation weakened household real incomes despite a 10% rise in salaries, pensions, and stipends.

No official estimate of inflation in 2016 is available. An IMF estimate in October 2016 put inflation at 6.4% in 2015 and 5.5% in 2016, though it may have slowed only to 6.0% (Figure 3.7.2). Sustaining inflation were depreciation pressure on the Turkmen manat last year against the US dollar factored in domestic prices, higher utility tariffs as public utility subsidies are being phased out, and rising prices for imported consumer goods because of higher import duties. To keep inflation within projections, the government continued to administer price controls and support import substitution, aiming to ensure that supplies of locally produced consumer goods were sufficient and affordable. In addition, the Central Bank of Turkmenistan kept strict control

3.7.1 GDP growth

%

Hydrocarbon GDP Non-hydrocarbon GDP Gross domestic product

11.1 _10.2 10.3 6.5 _6.2 0 5 10 15 2012 2013 2014 2015 2016

Sources: International Monetary Fund. 2016. Regional Economic Outlook, Middle East and Central Asia. October; ADB estimates.

3.7.2 GDP growth and inflation

% GDP growth Inflation 3 6 9 12 2012 2013 2014 2015 2016 0

Sources: International Monetary Fund. 2016. Regional Economic Outlook, Middle East and Central Asia. October; ADB estimates.

This chapter was written by Jennet Hojanazarova of the Turkmenistan Resident Mission, ADB, Ashgabat.

of cash in circulation by limiting foreign exchange conversion and by promoting noncash payments through debit cards, the Milli card denominated in manat, and the Visa card in dollars. Tighter monetary policy, reduced bank lending, and more stringent financial operations helped slash broad money growth to 7.2% from 16.1% in 2015.

The state budget is estimated to have incurred a small deficit equal to 0.8% of GDP in 2016, similar to the 0.7% deficit in 2015 (Figure 3.7.3). Revenue, estimated at 15.1% of GDP, was in line with the state budget, while expenditure was reported at 15.9% of GDP, which was 13.5% less than planned. Over 80% of spending went to social programs and a 10% rise in salaries, pensions, and stipends. Outlays for investment rose by 1.2% in 2016, much less than the 7.8% in 2015, as the government rationalized capital spending and prioritized large investment programs. (This does not take into account quasi-fiscal operations, which are believed to be large.) As industry outside of hydrocarbons improved its performance, the fiscal deficit derived from the non-hydrocarbon sector gradually shrank from 11.2% of non-hydrocarbon GDP in 2014 to 8.2% in 2015 and 6.8% last year. The Stabilization Fund helped smooth revenue volatility and offset contraction from lower energy exports.

The current account deficit is estimated to have widened to 18.5% of GDP as higher FDI-related imports of services and factor income payments combined with lower hydrocarbon exports, which account for 85% of all exports. Exports of goods fell by 15.4% while imports of goods contracted by 16.7% (Figure 3.7.4). According to estimates from the United Nations Conference on Trade and Development, the stock of FDI rose to $32.1 billion in 2015 from $13.4 billion in 2010, when last reported. FDI inflows reached $4.3 billion in 2015, up from $3.6 billion in 2010 (Figure 3.7.5). This made Turkmenistan the largest FDI recipient among landlocked economies in transition. Most FDI went to boost processing and value added in oil, gas, and chemical production. External debt, all of it public, remained low at 23.2% of GDP, and an IMF debt-sustainability assessment characterized debt as “resilient to most shocks.” According to figures from the Bank for International Settlements, foreign exchange reserves remained at a comfortable 30 months of import cover.

Economic prospects

Growth is projected to rise slightly to 6.5% in 2017 and 7.0% in 2018, led by government investment, strong FDI, and consumption, both public and private. An expected recovery in global energy prices should boost income and fiscal revenue.

On the supply side, a recovery in hydrocarbons is projected to help industry expand by 4.0%–5.0%, supported by growth in food processing, agro-industry, light industry, construction materials, and chemicals—all targets for import substitution. With extensive government support for farmers, agriculture is expected to grow by 10.0% in both 2017 and 2018. Demand for services is projected to grow by more than 10.0% in both years thanks to a boost from the Fifth Asian Indoor and Martial Arts Games, which are expected to attract participants from 62 countries in Asia and Oceania to the capital Ashgabat in September 2017.

3.7.1  Selected economic indicators (%)

2017 2018

GDP growth   6.5   7.0

Inflation   6.0   6.0

Current account balance

(share of GDP) –15.0 –13.0

Source: ADB estimates.

3.7.3 Government fiscal balances

% –20 –10 0 10 20 2012 2013 2014 2015 2016 Non-hydrocarbon fiscal balance

Non-hydrocarbon revenue Overall fiscal balance

Note: Fiscal data refer to general government. Non- hydrocarbon fiscal balance and revenue are percentages of non-oil gross domestic product, and the overall fiscal balance is a percentage of total gross domestic product.

Sources: International Monetary Fund. 2016. Regional Economic Outlook, Middle East and Central Asia. October; ADB estimates.

3.7.4 GDP growth and exports % 0 5 10 15 20 25 0 5 10 15 20 25 2012 2013 2014 2015 2016 $ billion

GDP growth Merchandise exports

Sources: International Monetary Fund. 2016. Regional Economic Outlook, Middle East and Central Asia. October; ADB estimates.

The authorities aim to limit infl ation by maintaining a tight monetary policy that includes a fi xed exchange rate, price controls, and strict foreign exchange regulations. However, directed lending will remain signifi cant to support import substitution and agriculture. Infl ation is projected at 6.0% in 2017 and 2018, assuming no further currency depreciation. Broad money growth is projected to reaccelerate to 8.2% in 2017, refl ecting credit expansion for the private sector (Figure 3.7.6).

The state budget projects a defi cit of 0.4% of GDP in 2017 and a surplus of 0.5% in 2018 as higher energy prices and expansion in the non-hydrocarbon economy raise revenue (Figure 3.7.7). The government plans to continue supporting social programs and build industrial infrastructure in the regions to create jobs and raise incomes in rural areas, thereby smoothing urban–rural disparities.

With some recovery in global energy prices, exports are forecast to rise by 12.0%, outpacing import growth of 10.3%. Despite the assumption of large FDI-related service imports and factor income payments, the current account defi cit is expected to narrow to 15.0% of GDP in 2017 and 13.0% in 2018. External debt is projected to rise slightly to 23.4% of GDP in 2017 and then decline to 18.0% in 2018 with the repayment of some debt for hydrocarbon investment.

Policy challenge—diversifying growth through