Economy of Azerbaijan
Country group |
|
---|---|
Statistics | |
Population | 10,156,256 (2022 Dec.)[2] |
GDP | |
GDP rank | |
GDP growth |
|
GDP per capita | |
GDP per capita rank | |
GDP by sector |
|
13.6% (2023 Jan.)[6] | |
Population below poverty line | |
33.7 medium (2021)[5] | |
Labour force | |
Labour force by occupation |
|
Unemployment | |
Average gross salary | [[|AZN 839 / €466 monthly (December, 2022)]] |
foodstuffs | |
External | |
Exports | $38.1 billion (2022 Dec.)[15] |
Export goods | oil and gas, machinery, foodstuffs, cotton |
Main export partners | |
Imports | $14.5 billion (2022 Dec.)[17] |
Import goods | machinery and equipment, foodstuffs, metals, chemicals |
Main import partners |
|
FDI stock | |
$4.4 billion (2019 est.)[5] | |
Gross external debt | $8.927 billion (2020 est.)[5] |
Public finances | |
17.59% of GDP (2020 est.)[5] | |
5.55% (of GDP) (2019 est.)[5] | |
Revenues | 17.175 billion (2022 est.)[18] |
Expenses | 19.002 billion (2022 est.)[19] |
$70,1 billion (2024 est.)[5] | |
The economy of Azerbaijan is highly dependent on oil and gas exports, in particular since the completion of the
Large oil reserves are a major contributor to Azerbaijan's economy. Gas and oil make up two-thirds of Azerbaijan's GDP, making it one of the top ten most fossil fuel-dependent economies in the world.[26]
Azerbaijan's economy is characterized by corruption and inequality.[24] The country's oil wealth has significantly strengthened the stability of Ilham Aliyev's regime and enriched ruling elites in Azerbaijan.[27][28][29][30] The country's oil wealth has enabled the state to host lavish international events, as well as engage in extensive lobbying efforts abroad.[31][32]
The national currency is the Azerbaijani manat. The private sector is weak in Azerbaijan, as the economy is dominated by state-owned enterprises.[25] More than half of the formal labor force works for the government in Azerbaijan.[25]
Economic history of Azerbaijan
Republic era
Oil and gas are the most prominent products of Azerbaijan's economy. 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 barrels per day. People visit petroleum spas (or "oil spas") to bathe in the local crude in Naftalan.[33] 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
In 1992, Azerbaijan became member of the
Azerbaijan has concluded 21 production-sharing agreements with various oil companies. An export pipeline that transports Caspian oil to the Mediterranean from
In 2010, Azerbaijan entered into the top eight biggest oil suppliers to EU countries with €9.46 billion.
In 2012, because of its economic performance after the Soviet breakup, Azerbaijan was predicted to become "Tiger of Caucasus".[39][40][41] In 2012, Globalization and World Cities Research Network study ranked Baku as a Gamma-level global city.[42]
In 2015, Turkey and Azerbaijan agreed to boost mutual trade to US$15 billion by 2023.[43]
Macro-economic trend
The following is a chart of trend of gross domestic product of Azerbaijan at market prices[44] with figures in USD.
Year | Gross domestic product PPP | Per capita income (as % of USA) |
---|---|---|
1995 | 19,497,000,000 | 8.78 |
2000 | 29,683,000,000 | 10.01 |
2005 | 59,087,000,000 | 15.52 |
2010 | 138,947,000,000 | 31.78 |
2015 | 169,789,000,000 | 32.15 |
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 = $1.70. Mean graduate pay was $5.76 per man-hour in 2010.
The following table shows the main economic indicators in 1980–2017.
Year | GDP (in bil. US$ PPP) | GDP per capita (in US$ PPP) | GDP
(in bil. US$ nominal) |
GDP growth (real) | Inflation (in Percent) | Government debt (in % of GDP) |
---|---|---|---|---|---|---|
1993 | 27.4 | 3,658 | 1.3 | −27.4% | 1,129.7% | ... |
1995 | 20.0 | 2,610 | 2.4 | −13.0% | 411.8% | 19% |
2000 | 30.4 | 3,781 | 5.3 | 6.2% | 1.8% | 23% |
2005 | 61.3 | 7,252 | 13.3 | 28.0% | 9.6% | 14% |
2006 | 84.9 | 9,927 | 21.0 | 34.5% | 8.2% | 11% |
2007 | 109.3 | 12,619 | 33.1 | 25.5% | 16.7% | 8% |
2008 | 123.3 | 14,046 | 49.0 | 10.6% | 20.8% | 7% |
2009 | 135.9 | 15,231 | 44.3 | 9.4% | 1.5% | 12% |
2010 | 143.9 | 15,995 | 52.9 | 4.6% | 5.7% | 13% |
2011 | 144.5 | 15,861 | 66.0 | −1.6% | 7.8% | 11% |
2012 | 150.2 | 16,271 | 69.7 | 2.1% | 1.1% | 14% |
2013 | 161.6 | 17,277 | 74.2 | 5.9% | 2.5% | 13% |
2014 | 168.9 | 17,824 | 75.2 | 2.7% | 1.5% | 14% |
2015 | 171.8 | 17,915 | 50.8 | 0.6% | 4.1% | 35% |
2016 | 168.6 | 17,378 | 37.8 | −3.1% | 12.6% | 51% |
2017 | 171.8 | 17,492 | 41.4 | 0.1% | 13.0% | 55% |
Source: IMF[45]
For more than a century the backbone of the Azerbaijani economy has been
Sectors of the economy
Agriculture
Azerbaijan has the largest agricultural basin in the region. About 54.9 percent of Azerbaijan is agricultural lands. At the beginning of 2007 there were 4.76 million hectares (11.8 million acres) of utilized agricultural area.
Some portions of most products that were previously imported from abroad have begun to be produced locally (among them are Coca-Cola by Coca-Cola Bottlers LTD, beer by Baki-Kastel, parquet by Nehir and oil pipes by EUPEC Pipe Coating Azerbaijan).[49]
A new program which is prepared by the European Union is aimed to support the economic diversification of Azerbaijan.[50]
Manufacturing
In 2007, mining and hydrocarbon industries accounted for well over 95 percent of the Azerbaijani economy. Diversification of the economy into manufacturing industries remains a long-term issue.[51]
As of late 2000s, the defense industry of Azerbaijan has emerged as an autonomous entity with a growing defense production capability. The ministry is cooperating with the defense sectors of Ukraine, Belarus and Pakistan.[52] Along with other contracts, Azerbaijani defense industries and Turkish companies, Azerbaijan will produce 40 mm revolver grenade launchers, 107 mm and 122 mm MLRS systems, Cobra 4×4 vehicles and joint modernization of BTR vehicles in Baku.[53][54][55][56]
Financial and business services
The banking sector remains small in relation to the size of the Azerbaijani economy.
Telecommunications
The Azerbaijan telecommunications sector is embroiled in corruption. Azerbaijan President Ilham Aliyev and his family own two of Azerbaijan’s largest mobile providers (Azerfon and Azercell) through offshore companies and potentially control three-quarters of the mobile market in Azerbaijan.[57] The third large mobile provider is Bakcell, which is registered to a company in an offshore tax haven and whose owners are unknown.[57] Ownership of the mobile providers in Azerbaijan enables the ruling Aliyev family to monitor phone calls and internet activity.[57]
Investigative reporting revealed that Azerbaijani President Ilham Aliyev and his family made more than $1 billion when state shares of mobile operators were transferred to a purportedly "local partner" which was in reality owned by the Aliyev family's offshore companies.[58]
Azerbaijan has relatively expensive call rates relative to comparable countries. The high prices are possibly due to consolidated control of the mobile market and a lack of competition.[57]
The Azerbaijan government has stated that it wants to create a high-tech sector in Azerbaijan.[59]
Tourism
Tourism is an important part of the economy of Azerbaijan. The country was a well-known tourist spot in the 1980s. However, the fall of the Soviet Union, and the First Nagorno-Karabakh War during the 1988–1994 period, damaged the tourist industry and the image of Azerbaijan as a tourist destination.[60]
It was not until the 2000s that the tourism industry began to recover, and the country has since experienced a high rate of growth in the number of tourist visits and overnight stays.
The
Currency system
The Azerbaijani manat is the currency of Azerbaijani, denominated as the manat, subdivided into 100 qapik. The manat is issued by the Central Bank of Azerbaijan, the monetary authority of Azerbaijan. The ISO 4217 abbreviation is AZN. The Latinised symbol is ().
The manat is held in a floating
There is a complex relationship between Azerbaijan's balance of trade, inflation, measured by the consumer price index and the value of its currency. Despite allowing the value of the manat to "float", Azerbaijan's central bank has decisive ability to control its value with relationship to other currencies.
Infrastructure
Energy
Two-thirds of Azerbaijan is rich in oil and natural gas.
Transportation
The convenient location of Azerbaijan on the crossroad of major international traffic arteries, such as the Silk Road and the south–north corridor, highlights the strategic importance of the transportation sector for the country's economy.[69] The transport sector in the country includes roads, railways, aviation, and maritime transport.
Azerbaijan is also an important economic hub in the transportation of raw materials. The
In 2012, the construction of
Regulation
A single-window system was established by a decree of the Azerbaijani President issued in 2007, 30 April, in order to simplify export-import procedures, innovate customs services, and improve the trade environment.[72] The president appointed the State Customs Committee as the leading body of controlling goods and transportation passing through the borders of the country in 2008.[75]
The State Migration Service issues appropriate permits for foreigners and stateless persons coming to Azerbaijan to live and work. The "single window" principle has been applied on migration management processes starting from 1 July 2009 according to the Decree.[76]
Poverty
Other economic indicators
- Data from CIA World Factbook[5] 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.)
- Agriculture
- utilized agricultural land: 47,584 square kilometres (18,372 sq mi) (2011)[47]
- total wood resources: 144,2 million cubic meters
- crops: cotton, grain, rice, grapes, fruit, vegetables, tea, tobacco
- livestock products: eggs
- Industrial production growth rate
-3% (2011 est.)
- Electricity
- 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
- foodstuffs.
- Reserves of foreign exchange and gold
- $7,146 billion (2011 est.)
- Debt – external
- $3.89 billion (2011 est.)
- Currency
- 1 Manat = 100 gepik
- Exchange rates
- Azerbaijani manat per US dollar – 1.7 (for 22 November 2020)[78]
- Azerbaijani manat per Euro – 2.01 (for 22 November 2020)[78]
- Fiscal year
- Calendar year
See also
- Azerbaijan and the International Monetary Fund
- List of companies of Azerbaijan
- Baku-Tbilisi-Ceyhan pipeline
- State Oil Company of Azerbaijan
- Petroleum industry in Azerbaijan
- Agriculture in Azerbaijan
- Tourism in Azerbaijan
- Baku
- Military of Azerbaijan
- Judiciary of Azerbaijan
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Further reading
- Habibov, Nazim: "Poverty in Azerbaijan" in the Caucasus Analytical Digest No. 34
- Küpeli, Ismail (2013). Aserbaidschan – ein autoritärer Rentierstaat? Politik und Ökonomie unter dem Aliyev-Regime. Göttingen: Optimus Verlag. ISBN 978-3-86376-042-7.
External links
- Azerbaijan Economic Development at Curlie
- Hübner, Gerald: "As If Nothing Happened? How Azerbaijan's Economy Manages to Sail Through Stormy Weather" in the Caucasus Analytical Digest No. 18