Turkmenistan’s capital tops list of most expensive cities for expats

An aerial view of Ashgabat in Turkmenistan
Turkmenistan’s economy has struggled to recover from a long-running economic crisis

The capital of Turkmenistan in Central Asia has been named as the world’s most expensive city for foreign workers. Ashgabat, a city of about one million people, topped a 2021 cost-of-living survey by consultancy firm Mercer.

The ranking puts Ashgabat above last year’s priciest city, Hong Kong, which was placed second, followed by Beirut in Lebanon and Tokyo in Japan. The annual report ranks 209 cities based on the cost of expenses such as housing, transport and food.

Mercer said it evaluated more than 200 goods and services for the report, which is designed to help companies and governments around the world determine how much they should pay expatriate employees. Expatriates, or expats, are people who live or work outside their native countries.

Most of the cities in Mercer’s top 10 are business hubs where economic growth has led to a hike in the price of housing and other living costs. But Ashgabat owes its high ranking to economic woes rather than prosperity, making it an outlier. Jean-Philippe Sarra of Mercer told AFP news agency that “high local inflation” explained Ashgabat’s rise to first from second in last year’s survey. Inflation is the rate of increase in prices for goods and services over time.

Known for its autocratic government and large gas reserves, Turkmenistan has been grappling with a long-running economic crisis that has plunged many citizens into poverty. Formerly part of the Soviet Union, the country is highly dependent on natural gas exports to Russia. Given this, Turkmenistan’s economic turmoil has been driven, in part, by low gas prices.

A global slump in energy prices in 2014 pushed up inflation and food prices. In September last year, a report by Human Rights Watch (HRW) said the Covid-19 pandemic had “drastically exacerbated Turkmenistan’s pre-existing food crisis”.

“Shortages of subsidised food, accelerating since 2016, have worsened, with people waiting hours in line to try to buy more affordable food products, often being turned away empty-handed,” the report said.

Despite this, Turkmenistan’s government started a major expansion of Ashgabat in May. Long-time President Gurbanguly Berdymukhamedov pledged to turn the capital into “one of the most prosperous cities in the world”. The report is just another illustration of the stark inequalities in Turkmenistan.

Many citizens in Ashgabat struggle to afford even basic things such as food. It is common for people to queue for hours outside of shops to get hold of bread or flour as food shortages still grip the country.

But there is also another Ashgabat – a glitzy capital full of marble buildings. This is the image that state propaganda tries to project in order to convince everyone that Turkmenistan is one of the most prosperous nations in the world.

Meanwhile, foreign companies have to boost this image if they want to enter the market. For energy giants, they are attracted by one of the largest gas reserves in the world.

To access it, some are prepared to follow written and unwritten rules on how to do business in Turkmenistan. This means their staff pay high prices for almost everything – from renting a house to buying food. Lebanon’s capital, Beirut, was a big riser, jumping from 45th a year earlier to 3rd in the 2021 survey.

Mercer attributed this to a number of factors, including the “political turmoil” of recent years and the “severe and extensive economic depression”.

“The Covid-19 pandemic and the Port of Beirut explosion [in 2020] have all amplified the economic effects, causing record-high inflation,” Mercer said.

A view of Zurich
Zurich is a global centre for banking and finance

Three Swiss cities were in the top 10, including Zurich, which dropped to fifth. Of the priciest Chinese cities included, Shanghai climbed one spot to number six while the capital, Beijing, rose to ninth. Singapore, an island city-state known for its flourishing financial sector, took seventh place.

A view of Shanghai
Shanghai’s landscape is dotted with skyscrapers

In the UK, London was placed 18th, edging up by one place from number 19 last year, while Birmingham was ranked at 121, moving up by eight places from 129 in 2020. At the bottom of the list, Kyrgyzstan’s capital Bishkek was ranked as the least expensive city for foreign employees by the survey.

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