Azerbaijan : Rich in natural resources, primarily crude oil and gas, Azerbaijan is transforming from a country which is heavily dependent on oil to a modern, diversified economy. It is one of the fastest growing economies worldwide with annual GDP growth averaging above 12pc in the decade to 2013, attributable to large and growing oil and gas exports.

Some non-export sectors also featured double-digit growth, including construction, banking, and real estate. The economy and government revenues depend on the hydrocarbons sector, which contributed about 44pc of GDP and 95pc of merchandise exports in 2013-2014.

Azerbaijan had been making a gradual transition to a more liberal economy. Per capita income has grown rapidly to $7,986 in 2014, well above that of its neighbours. It is classified as an upper middle income economy by the World Bank.

However, the declining trend in oil prices globally, affecting its revenues and the economy and the country’s GDP growth halved to 2.8pc in 2014 from 5.8pc a year earlier, according to an ADB report. The updated World Bank report sees Azerbaijan’s GDP growth at 4.4pc in 2015. It expects economic growth to slow down to 4.1pc in 2016 and 3.8pc in 2017.

The 3pc growth in the economy last year was the result of the 7pc growth in the non-oil sector.

Azerbaijan has weathered the recent global economic crisis much better than many other countries. The middle class in the country is growing rapidly.

Inflation is on the rise. The government has forecast annual inflation of 2.3pc in 2015, up from 1.4pc in 2014 but the central bank president is of the view that inflation could rise by 5-6pc this year.

According to the State Statistics Committee, the inflation rate in January-February, 2015 was higher than the same period of 2014. In February 2015, it was 4pc up from 1.5pc in the same month in 2014.

According to S&P estimates, the consumer price index will not exceed 1pc in 2015 versus 1.4pc a year earlier. It will start rising up to 2pc in 2016, 2.5pc in 2017 and 3pc in 2018.

There has been a solid rise in income and a reduction in poverty. The country has entered the ranks of higher middle-income countries, demonstrated by the decline in the poverty rate from 50pc in 2001 to 5.3pc in 2014. If oil prices remain low in 2016, the country could face serious challenges as all the Oil Fund money will have to be diverted for budgetary support.

In that case, the state is likely to pursue more cost-effective policies aimed at diversifying economic development.

Uzbekistan

Uzbekistan

Uzbekistan, a dry landlocked country, earns a significant amount of foreign exchange from export of hydrocarbons. Other major export earners include gold and cotton. It is the world’s fifth largest cotton exporter and its sixth largest producer.

However, diminishing foreign investment and difficulties transporting goods across borders is posing a challenge for the economy.

Uzbekistan plans to attract foreign investments of $3.5bn in 2015. The workers’ remittances sent to Uzbekistan play a pivotal role in country’s economic development and well-being of its population.

The country hopes to reduce absolute poverty level (the proportion of people whose income is less than $1 a day) from the current 16pc to 14pc in 2015.

Despite the negative impact of the ongoing global financial and economic crises, the slowdown in growth of world economy and stagnation and recession in many countries, Uzbekistan has achieved steadily high rates of economic development owing to the well-directed and systemic implementation of important priorities of the economic programme in 2014.

By the end of 2014 GDP grew by 8.1c. About 70pc of output amounted to finished goods with high added value.

External trade balance for 2014 showed a surplus of $180m, while the country’s gold and foreign currency reserves increased by $1.6bn.

The government is striving to promote industry-driven economic growth through its ambitious plan for 2015-2019. The Fund for Reconstruction and Development of Uzbekistan in 2015 provides $908.1m for projects included in the state investment programme.

The government priorities include eliminating obstacles to private enterprise, reducing the economic role of government, mastering the technology to manufacture goods domestically and focusing efforts on manufacturing only competitive goods that are currently being imported.

The government plans to increase industrial production by attracting investment and renovating facilities.

Under the plan, almost 500 factories will be modernised and about 400 factories will be built to produce about 1,000 new goods, increasing industrial production 1.5-fold and raising industry’s share of GDP to 27pc.

More than 261,600 jobs will be created due to the commissioning of new facilities, reconstruction and expansion of existing enterprises.

The government is also trying to raise $38bn in investments during the plan period.

Investment grew 10.9pc last year and exceeded $14.6bn in 2014. The ADB has allocated around $5bn for over 40 investment projects with the total estimated cost of over $14.5bn in 2015.

Government officials expect another strong 8pc growth in 2015. The World Bank expects the economy to grow by 7.4pc this year and 8.2pc in 2016.

Lower growth forecast for 2015 is related to the weakening economy in the Russian Federation and decrease in prices on the world commodity exchange.

Published in Dawn, Economic & Business, March 30th , 2015

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