Economy of Azerbaijan
|Economy of Azerbaijan|
|Currency||1 Manat = 100 qəpik|
|Fiscal year||Calendar year|
|Trade organisations||CIS, ECO, GUAM, WTO (observer)|
|GDP||Nom.: $68.8 billion (2012)
PPP: $96,8 billion (2012[update])
Rank: 76th (2011[update])
|GDP growth||0,2% |
|GDP per capita||$10,200 |
|GDP by sector||agriculture (5.5%), industry (62.7%), services (31.8%) (2011[update])|
|Inflation (CPI)||1.1% (2012[update])|
below poverty line
|Gini coefficient||36.5 (2001)|
|Labour force||6.12 million (2011[update])|
|services (49.6%), industry (12.1%), agriculture and forestry (38.3%) (2008[update])|
|Main industries||petroleum and natural gas, petroleum products, oilfield equipment; steel, iron ore, cement; chemicals; petrochemicals; textiles; machinery; cotton; foodstuffs|
|Ease of doing business rank||66th|
|Exports||$30,96 billion (2012 est.)|
|Export goods||oil and gas 90%, machinery, cotton, foodstuffs.|
|Main export partners|| Italy 25.9%,
Israel 5.1% (2012 est.) 
|Imports||$10.06 billion (2012 est.)|
|Import goods||machinery and equipment, oil products, foodstuffs, metals, chemicals|
|Main import partners|| Turkey 18.6%,
United Kingdom 7.1%,
United States 5.1%
Ukraine 5.0% (2012 est.)
|FDI stock||$11.85 billion (31 December 2012) |
|Gross external debt||$7.60 billion (31 December 2012) |
|Public debt||(4.7% of GDP) 2011[update]|
Azerbaijan is an economy that has completed its post-Soviet transition into a major oil based economy (with the completion of the Baku-Tbilisi-Ceyhan Pipeline), from one where the state played the major role. Azeri GDP grew 41.7% in the first quarter of 2007, possibly the highest of any nation worldwide. Such rates cannot be sustained, but despite reaching 26.4% in 2005 (second highest GDP growth in the world in 2005 only to Equatorial Guinea), and 2006 over 34.6% (world highest), in 2008 dropped to 10.8%, and dropped further to 9.3% in 2009. The real GDP growth rate for 2011 was expected at 3.7% but had dropped to .1%. Large oil reserves are a major contributor to the economy. The national currency, the Azerbaijani manat, was stable in 2000, depreciating 3.8% against the dollar. The budget deficit equaled 1.3% of GDP in 2000.
Progress on economic reform has generally lagged behind macroeconomic stabilization. The government has undertaken regulatory reforms in some areas, including substantial opening of trade policy, but inefficient public administration in which commercial and regulatory interests are co-mingled limit the impact of these reforms. The government has largely completed privatization of agricultural lands and small and medium-sized enterprises. In August 2000, the government launched a second-stage privatization program, in which many large state enterprises will be privatized. Since 2001, the economic activity in the country is regulated by the Ministry of Economic Development of Azerbaijan Republic.
The following is a chart of trend of gross domestic product of Azerbaijan at market prices with figures in millions of Manats.
|Year||Gross domestic product||US dollar exchange||Per capita income
(as % of USA)
For purchasing power parity comparisons, the US dollar was exchanged at 1,565.88 Manats only. Currently, the new Manat is in use, with an exchange rate of about 1 manat = $1.10. Mean graduate pay was $5.76 per manhour in 2010.
For more than a century the backbone of the Azerbaijani economy has been petroleum, which represented 10 percent of Azerbaijan’s GDP in 2005, and is projected to double to almost 20 percent of GDP in 2007. Now that Western oil companies are able to tap deepwater oilfields untouched by the Soviets because of poor technology, Azerbaijan is considered one of the most important areas in the world for oil exploration and development. Proven oil reserves in the Caspian Basin, which Azerbaijan shares with Russia, Kazakhstan, Iran, and Turkmenistan, are comparable in size to the North Sea, although exploration is still in the early stages.
Azerbaijan has concluded 21 production-sharing agreements with various oil companies. An export pipeline that transports Caspian oil to the Mediterranean from Baku through Tbilisi, Georgia to Ceyhan, Turkey (the Baku-Tbilisi-Ceyhan Pipeline) became operational in 2006. The pipeline is expected to generate as much as $160 billion in revenues for the country over the next 30 years. The recent high price of oil is highly beneficial to Azerbaijan's economy as the nation is in the midst of an oil boom. Eastern Caspian producers in Kazakhstan also have expressed interest in accessing this pipeline to transport a portion of their production. In March 2001, Azerbaijan concluded a gas agreement with Turkey, providing a future export market for Azerbaijan.
Through the Soviet period, Azerbaijan had always been more developed industrially than Armenia and Georgia, two neighboring Transcaucasia countries - but also less diversified, as a result of slow investment in non-oil sector. With a history of industrial development of more than 100 years, Azerbaijan proved to be a leading nation in Southern Caucasus throughout the turmoil of Soviet Union collapse in early 1990s until nowadays.
Oil remains the most prominent product of Azerbaijan's economy with cotton, natural gas and agriculture products contributing to its economic growth over the last five years. More than $60 billion was invested into Azerbaijan's oil by major international oil companies in AIOC consortium operated by BP. Oil production under the first of these PSAs, with the Azerbaijan International Operating Company, began in November 1997 and now is about 500,000 b/d. People visit petroleum spas (or "oil spas") to bathe in the local crude in Naftalan A leading caviar producer and exporter in the past, Azerbaijan's fishing industry today is concentrated on the dwindling stocks of sturgeon and beluga in the Caspian Sea.
Azerbaijan shares all the problems of the former Soviet republics in making the transition from a command to a market economy, but its energy resources brighten its long-term prospects. Azerbaijan has begun making progress on economic reform, and old economic ties and structures are slowly being replaced. An obstacle to economic progress, including stepped up foreign investment, is the continuing conflict with Armenia over the Nagorno-Karabakh region. Trade with Russia and the other former Soviet republics is declining in importance while trade is building up with Turkey, Iran, UAE, and the countries of EU. Azerbaijan is also a member of the Economic Cooperation Organization (ECO). Long-term prospects will depend on world oil prices and the location of new pipelines in the region. In 2010, Azerbaijan entered into top eight biggest oil suppliers to EU countries with €9.46 billion. In 2011, the amount of investment in Azerbaijan was $20 billion, a 61% increase from 2010. According to Minister of Economic Development of Azerbaijan, Shahin Mustafayev, in 2011, "$15.7 billion was invested in non-oil sector, while the rest - in oil sector."
Azerbaijan faces serious environmental challenges. Soil throughout the region was contaminated by DDT and toxic defoliants used in cotton production during the Soviet era. Caspian petroleum and petrochemicals industries also have contributed to present air and water pollution problems. Several environmental organizations exist in Azerbaijan, yet few funds have been allocated to begin the necessary cleanup and prevention programs. Over-fishing by poachers is threatening the survival of Caspian sturgeon stocks, the source of most of the world's supply of caviar. The Convention on International Trade in Endangered Species (CITES) has listed as threatened all sturgeon species, including all commercial Caspian varieties. In 2007 the Blacksmith Institute listed Sumgayit as one of the ten most polluted cities in the world. According to Mercer Human Resource Consulting 2007 Worldwide Quality of Living Survey, the capital of Azerbaijan, Baku, was the world's lowest-ranking city for health and sanitation; however, by 2010 Baku had pulled itself up 4 index points and its place was taken by Port-au-Prince in Haiti.
In 2007, mining and hydrocarbon industries accounted for well over 95 per cent of the Azerbaijani economy. Diversification of the economy into manufacturing industries remain a long-term issue.
The GDP growth rates observed in Azerbaijan during last years made the country one of the fastest growing economies in the world. But the banking sector of Azerbaijan has yet to tap the vast growth potential that should be achievable due to the continuation of the high economic growth. For this reason the banking sector remains small in relation to the size of the Azerbaijani economy. Although in the more advanced countries banking sectors made further visible progress in the catch-up process, the Azerbaijani banking market being in an earlier stage of development, also successes in pushing forward market-oriented reform and the privatization process. Still the banking system is considered an important element of financial system of Azerbaijan. An advanced two-stepped banking system, which is based on market principles, (the Central Bank of the Republic of Azerbaijan in the first step, in the second one commercial banks and other non-bank credit organizations) functions in the republic.
Since 2002 important stage of restructuring of banking system started to be carried out. Taking into consideration entry of big oil revenues in the country, as a logical result of successful oil strategy, and in this base, as the banks were ready to an effective transfer of their financial resources to the strategic goals, development strategy was made for 2002–2005. Far-reaching reforms of the banking sector are conducted in the country. The main challenges are due to the slow privatization rate of the state banks, a weak financial market and a lack of bank transparency. However, the reforms have started showing positive resu lts and competition among the leading banks is increasing.
By 1 April 2010, 47 banks, 631 bank branches function in Azerbaijan. One of banks was founded with participation of state capital, 23 of foreign capital. To the same date, 98 non-bank credit organizations operate in the republic along with banks. Growth of real money incomes of population, development of trust in bank system, improving the legal bases of protection of interests of creditors and depositors, in particular launch of ‘Deposits Insurance Fund’ were the criteria characterizing rapid growth of deposits of population. As of 1 April 2010, bank deposits of population were equal to 2,4 billion AZN. 33,3% of them were long-term deposits (higher than a year). Along with population, bank deposits of corporative customers increase dynamically. By 1 April 2010, bank deposits of corporative customers is 2,1 bn AZN. Dynamic development of volume of special and involved funds of the banks has created effective conditions for enlargement of active operations. As of 1 April 2010, the volume of bank assets is 12 bn AZN. Crediting plays special role in structure of bank assets. As of 1 April 2010, bank credits to customers is 8.5 bn AZN, which makes 70.5% of bank assets. Special weight of private sector in structure of credit investments is higher than 82% (7 bn AZN).
Azerbaijan led the world as the top reformer in 2007/08, with improvements on seven out of 10 indicators of regulatory reform. Azerbaijan started operating a one-stop shop in January 2008 that halved the time, cost, and number of procedures to start a business. Business registrations increased by 40% in the first 6 months. Azerbaijan also eliminated the minimum loan cutoff of $1,100, more than doubling the number of borrowers covered at the credit registry. Also, taxpayers can now file and pay their taxes online. Azerbaijan’s extensive reforms moved it far up the ranks, from 97 to 33 in the overall ease of doing business.
- Data from CIA World Factbook unless noted otherwise
- Investment (gross fixed)–
17% of GDP (2011 est.)
- Household income or consumption by percentage share–
- lowest 10%: 3.4%
- highest 10%: 27.4% (2008)
- Inflation rate (consumer prices)–
1.1% (2012 est.)
- utilized agricultural land: 47,584 square kilometres (18,372 sq mi) (2011)
- total wood resources: 144,2 million cubic metres
- crops: cotton, grain, rice, grapes, fruit, vegetables, tea, tobacco
- livestock products: beef, mutton, poultry, milk, eggs
- Industrial production growth rate–
-3% (2011 est.)
- production: 22,55 billion kWh (2008)
- consumption: 18,8 billion kWh (2008)
- exports: 812 million kWh (2008)
- imports: 596 million kWh (2008)
- Current account balance–
- $11,12 billion (2011 est.)
- Exports - commodities–
- petroleum and natural gas, petroleum products, oilfield equipment; steel, iron ore, cement; chemicals, petrochemicals, textiles, machinery, cotton, foodstuffs.
- Reserves of foreign exchange and gold–
- $7,146 billion (2011 est.)
- Debt - external–
- $3.89 billion (2011 est.)
- 1 Manat = 100 gepik
- Exchange rates–
- Azerbaijani manat per US dollar - 0.7893 (as of 2011
- Azerbaijani manat per Euro - 1.24 (as of 2008)
- Fiscal year–
- Calendar year
- List of companies of Azerbaijan
- Azerbaijani manat
- Baku-Tbilisi-Ceyhan pipeline
- State Oil Company of Azerbaijan
- Petroleum industry in Azerbaijan
- Agriculture in Azerbaijan
- Tourism in Azerbaijan
- Military of Azerbaijan
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Global Economic Crisis
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