Economic Growth
Like most of the world, Azerbaijan felt the repercussions of the global economic downturn. The country’s real GDP held at around 5 percent in 2009, compared to its robust economic engine prior to that when it was named the world’s fastest growing economy three years in a row.
Still, Azerbaijan continues on a path of liberal market reforms and encouraging entrepreneurship. It has also streamlined what was once considered a byzantine, post-Soviet tax regime into a model for the region.
Government financial and budget forecasts in Azerbaijan, which are closely tied to the price of oil, tend to fall on the conservative side. This caution is credited with helping to insulate Azerbaijan’s economy from the significant challenges and financial turmoil faced around the world.
Weaker economic growth and lower oil prices are expected to lower budget revenue, but the government will be able to fund social spending and finance ongoing infrastructure projects through its sovereign oil fund, the State Oil Fund of Azerbaijan (SOFAZ).
The Central Bank has loosened monetary policy substantially since October 2008, citing the slowing in the rate of consumer price rises. It has reduced the refinancing rate by a total of 13 percentage points, to 2%, and eased banks’ reserve requirements. The slowdown in inflation is attributable to a decline in commodity prices and a deceleration in the rate of money supply growth in 2009. Some analysts forecast that, faced with lower foreign-exchange inflows, the Central Bank will probably need to allow the local currency, the manat, to depreciate in nominal terms against the US dollar.
It is expected that throughout 2010 and 2011 the recovery of domestic demand and an increase in global energy prices will result in modest inflation.
|
Real GDP growth |
26.4 |
34.5 |
25 |
10.8 |
5.2 |
6.5 |
7 |
|
Industrial production growth |
40 |
38 |
25 |
6 |
3 |
5 |
6.4 |
|
Gross fixed investment growth |
24.6 |
15 |
5.2 |
17 |
4.5 |
4.8 |
6 |
|
Unemployment rate (av) |
1.1 |
1.2 |
0.9 |
0.9 |
1 |
1 |
1.1 |
|
Consumer price inflation (av) |
9.6 |
8.3 |
16.7 |
20.8 |
2.2 |
8 |
7.7 |
|
Consumer price inflation (year-end) |
5.3 |
11.4 |
19.7 |
15.4 |
3.3 |
7.3 |
6.8 |
|
Short-term interbank rate |
17 |
18 |
19.1 |
19.8 |
17 |
15 |
14 |
|
Consolidated government balance(% of GDP) |
0.6 |
1.3 |
-6.2 |
-6.4 |
-8.9 |
-7.7 |
-3.7 |
|
Exports of goods fob (US$ bn) |
7.6 |
12.4 |
21.3 |
30.6 |
19.2 |
24.9 |
24.3 |
|
Imports of goods fob (US$ bn) |
4.3 |
5.2 |
6 |
7.6 |
6.8 |
7.4 |
8.1 |
|
Current-account balance (US$ bn) |
0.2 |
2.2 |
9 |
16.5 |
7.2 |
11.9 |
10.5 |
|
Current-account balance (% of GDP) |
1.3 |
11.2 |
30.7 |
35.5 |
14.1 |
20.5 |
15.3 |
|
External debt (year-end; US$ bn) |
2.2 |
2.5 |
2.4 |
2.6 |
2.3 |
2.3 |
2.3 |
|
Exchange rate Manat:US$ (av) |
0.95 |
0.89 |
0.86 |
0.81 |
0.83 |
0.81 |
0.79 |
