China
Turquía
Europa
Uzbekistán
Azerbayán
Kazajistán
JapónStable growth, durably driven by hydrocarbon exports
Growth is expected to continue in 2026, as was the case in 2025. Despite the slowdown in the Chinese economy – by far the main market for hydrocarbon exports – relatively high gas and oil prices will continue to support external revenues. The non-hydrocarbon economy will benefit from additional investment in petrochemicals (refining and fertiliser manufacturing) and agriculture, particularly cotton, which is mainly exported to Turkey. Grown along the Amu Darya River, which originates in the Pamir Mountains between Afghanistan and Tajikistan and forms part of the border with Uzbekistan, cotton growing continues to benefit from free labour, mobilised by the state through a system of forced labour involving tens of thousands of people. Economic activity will also be slightly supported by public spending, particularly investment in the Ashgabat-Türkmenabat motorway (connecting the north and south with the east of the country) and in the development of the new city of Arkadag – a flagship project launched from scratch in 2019 which is still under construction, although the city remains largely uninhabited for the time being despite its size and lavish ornamentation.
Private consumption and services will remain restricted by low wages, poverty, unemployment and shortages of essential goods, linked to strict exchange controls. Inflation will pick up again, fuelled by the annual increase of around 10% in public sector wages and pensions, and by price distortions due to the parallel currency market.
The government is seeking to reduce its dependence on China via gas pipelines to Pakistan and India (the TAPI project, whose completion has been postponed until the end of the decade), and to Europe, via a Trans-Caspian pipeline that would pass through Azerbaijan and Turkey. The recent meeting between Azerbaijani and Turkmen leaders has reignited speculation: the project would be of major interest to Europe, but remains politically fragile, with Moscow and Tehran opposing it to preserve their transit role and their share of the gas market. The government's efforts are therefore focused on reviving the ‘D’ pipeline to China, which would increase delivery capacity via swap agreements, whereby Turkmen gas is sent to eastern Iran, with Iran responsible for delivering its gas to Turkey and Iraq – as well as on developing the giant Galkynysh field (400 km east of Ashgabat) and new offshore deposits in the Caspian Sea.
A comfortable sovereign position
The slight budget surplus is expected to continue in 2025 and 2026. Ninety per cent of public revenue derives from hydrocarbon trade. The decline in hydrocarbon revenues associated with falling gas and oil prices could be offset by non-hydrocarbon revenues. Expenditure will increase at the same rate, with rises in civil servants' salaries and pensions. Social programmes, such as price controls and food rationing, are expected to continue. Public investment will be concentrated in infrastructure and non-hydrocarbon sectors. Last, other low value-added projects such as the multiple statues of the leader, of his favorite animals and national figures will probably be announced, as is the case every year. Turkmenistan's debt will remain stable and its very minor amount is held entirely by domestic creditors.
The current account surplus is expected to continue to narrow in 2026. Imports will grow faster than exports: public works require construction materials from abroad and higher civil servant salaries are fuelling demand for consumer goods, although access to the latter remains difficult owing to exchange controls. The balance of services could improve in the coming years thanks to the development of tourism, which is expected to be boosted by simplified entry procedures to visit the country and the creation of an electronic visa. However, tourism potential is lower than that of neighbouring Uzbekistan, which has more attractive historical sites. Most FDI comes from China, particularly as part of the Belt Road Initiative, but it is relatively low as a proportion of GDP. FDI helps to maintain the gas pipelines to China and operate the Galkynysh field. Turkmenistan does not benefit from any multilateral aid or investment programmes. The current account surplus translates into significant foreign exchange reserves that are equivalent to 19 months of imports.
One of several authoritarian regimes in Central Asia
Turkmenistan is officially a presidential republic, but in practice has been an authoritarian regime since gaining independence in 1991. The dynastic transition took place in 2022 with the election of Serdar Berdimuhamedov as President, while his father, Gurbanguly, the former head of state, retains decisive influence as Chairman of the Upper House of Parliament where the real power is concentrated. The multi-party system, authorised in 2012, has not allowed the emergence of a genuine opposition and political life is strictly controlled. Civil liberties are limited, the media is supervised and civil society is muzzled. The cult of personality, omnipresent in official communications, reinforces the leaders’ legitimacy and is accompanied by monumental architectural projects, often at odds with a socio-economic situation marked by hidden shortages, unemployment and declining birth rates.
On the international stage, Turkmenistan maintains its doctrine of neutrality, proclaimed in 1995 and recognised by the UN, while strengthening its economic and political ties with China, its main trading and financial partner. Leaders meet frequently at regional diplomatic summits, the Belt Road Initiative, and, in September 2025, at the SCO summit, even though Turkmenistan is not a member. The country has also been a member of the Organization of Turkic States since 2022, marking a rapprochement with Turkey and a relative distancing from Russia. Turkmenistan is also a member of the Organization of Islamic Cooperation.
The country cooperates cautiously with its immediate neighbours. To the south, Afghanistan is the main concern: the stability of the Taliban regime will determine the future of the TAPI gas pipeline project and access to water resources in the Amu Darya. Relations with Iran are ambivalent, oscillating between occasional energy cooperation and recurring tensions over the settlement of gas debts. Relations with Uzbekistan have improved since Tashkent's regional opening, particularly on trade and water-sharing issues. Last, relations with Kazakhstan continue to be stable, and focus on cooperation in the Caspian Sea and pipelines to China.
