More about Azerbaijan

Azerbaijan

Steady Growth Predicted for Azerbaijan

Azerbaijan has 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. Azerbaijan’s 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 0.1%. 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.

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 4,755,100 hectares of utilized agricultural area. In the same year the total wood resources counted 136 million m³. Azerbaijan’s agricultural scientific research institutes are focused on meadows and pastures, horticulture and subtropical crops, leaf vegetables, viticulture and wine-making, cotton growing and medicinal plants. In some lands it is profitable to grow grain, potatoes, sugar beets, cotton and tobacco. Livestock, dairy products, and wine and spirits are also important farm products. The Caspian fishing industry is concentrated on the dwindling stocks of sturgeon and beluga.

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).

New program which is prepared by the Europe Union is aimed to support economic diversification of Azerbaijan.Program is considered for southern region Lankaran which has the lowest economic indicator and the lowest income per capita, as well as, the lowest level of investment, but at the same time, high potential for the production of garden products in high quality.The program will be focused on the development of the region at the local and international levels.

Manufacturing

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.

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. Along with other contracts, Azerbaijani defence industries and Turkish companies, Azerbaijan will produce 40mm revolver grenade launchers, 107mm and 122mm MLRS systems, Cobra 4×4 vehicles and joint modernization of BTR vehicles in Baku.

Services

Financial and business services

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.[40] For this reason the banking sector remains small in relation to the size of the Azerbaijani economy. Since 2002, important stages of restructuring of the banking system have 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.

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). 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).

 

Hedging & Refinancing Options

According to the Country Risk Classification published by the OECD, hedging and refinancing options are available.

 

*This article is licensed under the GNU Free Documentation License and Creative Commons CC-BY-SA 3.0 Unported (Abbreviated Version). The article is based on the article Economy of Azerbaijan from the free encyclopedia Wikipedia . In Wikipedia a list of authors is available.

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Adnan Icemer

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