Economy of Azerbaijan

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Republic of Azerbaijan
currency	Manat (Azn)
Key figures
Gross domestic product (GDP)	$ 37.848 billion (2016)
GDP per capita	$ 17,438 (2016)
growth	-3.1% (2016)
inflation rate	10% (2017)
Unemployment rate	6.05% (11/2017)
Foreign trade
export	$ 8.5 billion (2016)
Export partner	Italy (17.1%) Turkey (12.4%) Taiwan (8.7%) Israel (7.3%) Germany (6.7%)
import	$ 9.1 billion (2016)
Import partner	Russia (19.2%) Turkey (13.9%) China (8.3%)
public finances
Public debt	33.1% of GDP (gross, 2016)

The  economy of Azerbaijan  is the largest economy in the South Caucasus with a  gross domestic product (GDP) of 37.848 billion US dollars (2016) .

According to the World Economic Forum's global competitiveness index  , Azerbaijan ranks 35th (out of 137 states) of the most competitive countries in the world. In   2017, Azerbaijan ranks 68th out of 180 countries in the Economic Freedom Index .

history

Early years of independence

The collapse of the Soviet Union resulted in the collapse of the unified economic area in the South Caucasus. As a result, Azerbaijan had to contend with massive economic declines in the 1990s. In addition, the difficult domestic political situation in Azerbaijan and the Nagorno-Karabakh war with Armenia had a negative impact on economic development. According to the report of the UN General Assembly , over 6,000 industrial and agricultural businesses were destroyed during the war, 890 settlements, 2,300 km of water pipelines, 2,000 km of gas pipelines, 15,000 km of power lines, 1,000,000 hectares of arable land, 280,000 hectares of forest and 1,200 km of irrigation systems were destroyed.

Market economic transformation

After the fall of the Soviet Union, Azerbaijan's transformation to a market economy was unable to develop any dynamism due to the internal political disputes up to 1994 and the military conflict over Nagorno-Karabakh in the first years of independence. In January 1992 the former Soviet Union companies as well as oil and chemical companies were taken over into state ownership. A market opening could not be achieved in the early years of independence.

Under the Heydar Aliyev government, GDP had risen steadily, especially after 1999. The country's economic growth in 2000 was around 4% higher than in 1999. According to statistics, the contribution of the oil and gas sector to GDP rose to around 31% in 2001. At the same time, the share of agriculture had fallen to 18% of GDP. The inflation rate in Azerbaijan averaged 1.5%.

Development of the key figures since 1993

All GDP values ​​are given in US dollars ( purchasing power parity ).

year	1993	1995	2000	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
GDP (purchasing power parity)	27.39 billion	19.95 billion	30.37 billion	61.26 billion	84.91 billion	109.36 billion	123.32 billion	135.90 billion	143.91 billion	144.51 billion	150.27 billion	161.65 billion	168.92 billion	171.86 billion	168.66 billion	171.81 billion
GDP per capita (purchasing power parity)	3,658	2,610	3,781	7,252	9,927	12,619	14,046	15,231	15,995	15,861	16,271	17,277	17,824	17,915	17,378	17,492
GDP growth (real)	−27.4%	−13.0%	6.2%	28.0%	34.5%	25.5%	10.6%	9.4%	4.6%	−1.6%	2.1%	5.9%	2.7%	0.6%	−3.1%	0.1%
Inflation (in percent)	1,129.7%	411.8%	1.8%	9.6%	8.2%	16.7%	20.8%	1.5%	5.7%	7.8%	1.1%	2.5%	1.5%	4.1%	12.6%	13.0%
Public debt (as a percentage of GDP)	...	19%	23%	14%	11%	8th %	7%	12%	13%	11%	14%	13%	14%	35%	51%	55%

Basics

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Energy sector

The Azerbaijani economy is predominantly based on the oil and gas industry. In 2017, the secured Azerbaijani oil reserves were put at 7.0 billion barrels and the natural gas reserves at 1.1 trillion cubic meters. Petroleum products comprised 86.7% of exports in 2017. The main importing countries were Italy (share: 17.1%), Turkey (12.4%) and Taiwan (8.7%). The main investors are British Petroleum ( BP ) and Azerbaijan State Oil Company ( SOCAR) . The largest project in the country's energy sector is around 26 billion. Expensive Shah Deniz gas field development, expected to be completed in 2018.

Baku-Tbilisi-Ceyhan pipeline

See also : Baku-Tbilisi-Ceyhan Pipeline

In 1994, SOCAR and a consortium of eleven companies signed the so-called “Contract of the Century” relating to Azerbaijani oil and gas reserves and the exploration and development of the deep-sea oil deposits Azeri-Chirag-Guneshli (ACG). In it, the contracting parties agreed a sum of US $ 64 billion by 2024. invest in Azerbaijan's energy industry.

The European Union also supported this project because it wanted to reduce its energy dependency on Russia by building the Baku-Tbilisi-Ceyhan pipeline . On November 18, 1999, the then presidents of Turkey ( Süleyman Demirel ), Georgia ( Eduard Shevardnadze ), Azerbaijan ( Heydər Əliyev ) and the USA ( Bill Clinton )  signed a letter of intent to build the Baku-Tbilisi-Ceyhan pipeline in  Istanbul . Construction started in 2002.

Energy policy cooperation with the EU

On November 6, 2006 the then President of the European Commission , José Manuel Barroso , and the President of Azerbaijan, Ilham Aliev , agreed on gas supplies to Europe . This agreement made an important contribution to better integration of Azerbaijan into the European energy markets. Former EU Energy Commissioner Andris Piebalgs said: "Close relations with Azerbaijan as an important energy supplier and as an important transit country to the EU help to further improve our energy security". The agreement consisted of four main objectives:

• "Gradual alignment of Azerbaijani legislation with Community legislation in the field of energy and, ultimately, convergence of electricity and gas markets;
• greater stability and security of energy supply and transit systems from Azerbaijan and the Caspian Basin to the EU;
• Developing a comprehensive energy demand management policy;
• technical cooperation and exchange of expertise. "

On January 13, 2011, the Commission and Azerbaijan signed a Strategic Gas Agreement. Azerbaijan thus promised in writing for the first time to supply Europe with gas. 

Agriculture

Agriculture is the second largest economic sector in Azerbaijan. The transformation and modernization of agriculture plays an important role in the government's 2020 development strategy . The aim is to better supply the population with food. According to statistics, Azerbaijan supplies itself 90% with meat, 80% with eggs, 75% with dairy products, 65% with cooking oil and 50% with butter. In addition, cotton, wine, silkworm farming , fruit and grain farming, vegetables, fruits, rice, tea, tobacco, sheep and cattle are the main agricultural products in the country. The most important agricultural export products are fruits and vegetables.

Azerbaijan receives financial support from the World Bank for the further development of agriculture.

Construction sector

The construction sector accounts for a good 20% of GDP. In April 2016, the MIDA agency was founded to promote social housing. In 2016 and 2017, the construction industry suffered from sharply cut government investments due to the low oil prices, the lower purchasing power of the population and the crisis in the banking sector.

Engineering industry

Mechanical engineering industry in Azerbaijan is still underdeveloped. Local manufacturing focuses on the needs of the oil and gas industry. There was hardly any investment in the mechanical engineering industry. However, the government wants to increase local production of agricultural machinery and drilling equipment. The state plans to build a metallurgy complex for 1.2 billion euros by 2019.

Individual evidence

1. ↑ GDP (current US $). Retrieved November 13, 2017 (American English). 
2. ↑ GDP per capita. Retrieved on November 13, 2017 (German). 
3. ↑ GDP (current US $). Retrieved November 13, 2017 (American English). 
4. ↑ ^{a b c d} Economic data Azerbaijan GTAi. Retrieved on November 13, 2017 (German). 
5. ↑ unemployment rate. Retrieved November 13, 2017 . 
6. ↑ GDP (current US $) | Data. Retrieved November 11, 2017 (American English). 
7. ↑ Country / Economy Profiles . In: Global Competitiveness Index 2017-2018 . ( weforum.org [accessed November 14, 2017]).
8. ↑ Country Rankings: World & Global Economy Rankings on Economic Freedom. Retrieved December 5, 2017 . 
9. ↑ United Nations General Assembly, 59 Session, Agenda Item 163, The Situation in the Occupied Territories of Azerbaijan, A / 59/586, Results of Armenian Aggression.
10. ^ Transformation: Azerbaijan. Retrieved November 11, 2017 . 
11. ↑ Tobias Greiff: The “New” Great Game - the Caspian region, a global conflict area of ​​the 21st century? Analysis of the interests and ambitions of different states in the Caspian region. Politlounge, 2006, p. 4.
12. ↑ Azerbaijan - Gross Domestic Product (GDP) - Historical data chart per year. Retrieved November 13, 2017 . 
13. ↑ Manuela Troschke: Azerbaijan, overall assessment. Eastern European Institute Munich 2001, pp. 121–128.
14. ^ Report for Selected Countries and Subjects. Retrieved August 27, 2018 (American English). 
15. ↑ ^{a b} Economy. Retrieved on November 13, 2017 (German). 
16. ↑ ^{a b c} Germany Trade and Invest: Product Markets in Azerbaijan 2017. January 16, 2017, accessed on November 13, 2017 . 
17. ↑ Germany Trade and Invest GmbH: GTAI - Search. Retrieved November 21, 2017 . 
18. ↑ Uwe Halbach: The Caspian Area - Between "Great Game" and "Silk Road". ( Memento of the original from December 1, 2017 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. In: Mir A. Ferdowsi (Ed.): Security and Peace at the Beginning of the 21st Century. Concepts - Actors - Regions. Bavarian State Center for Political Education, 3rd edition, Munich 2004, pp. 475–490, here p. 475. 
19. ↑ ^{a b} European Commission - PRESS RELEASES - Press release - President Barroso and the President of Azerbaijan sign energy partnership agreement. Retrieved November 18, 2017 . 
20. ↑ European Commission - PRESS RELEASES - Press release - Commission and Azerbaijan sign strategic gas agreement. Retrieved November 18, 2017 . 
21. ↑ ^{a b} Germany Trade and Invest GmbH: GTAI - Search. Retrieved November 13, 2017 . 
22. ^ AHK Azerbaijan: General information about Azerbaijan. (No longer available online.) Archived from the original on October 12, 2017 ; accessed on November 13, 2017 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  
23. ↑ LIPortal - the country information portal economy & development. Retrieved on November 13, 2017 (German). 
24. ^ ^{A b} Germany Trade and Invest GmbH: GTAI - Product Markets. Retrieved November 13, 2017 .