image copyrightGetty Imagesimage captionTurkmenistan'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.

Why is Ashgabat at the top of the list?

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.

media captionTurkmenistan remains one of the most isolated and repressive states in the world

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.

  • A country profile of Turkmenistan

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".

Where did other cities rank in the survey?

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.

image copyrightGetty Imagesimage captionZurich 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.

image copyrightGetty Imagesimage captionShanghai'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.