World economies
AZERBAIJAN, a small country located in South-West Asia, adopted a policy of deregulation and privatised 99 per cent of its agricultural sector after its independence.
Agriculture contributes nearly six per cent to the GDP and employs 37pc of the workforce. The share of the GDP in the agricultural sector has been decreasing annually in favour of the industry and services sectors.
The main crops are wheat, barley, corn, potatoes, cotton, tea, silk, tobacco and fruits. However, productivity remains low due to the lack of modernisation.
The industry sector accounts for 51.7pc of the GDP and employs 14pc of the workforce. Services, which have been steadily increasing their share in the GDP, contribute 42.3pc of the GDP and employ 49pc of the active population.
The flourishing economic sectors are banking, construction and real estate. The main industrial sectors of the country are gas, oil and its by-products: steel, iron, chemical and petro-chemical products and textile.
Azerbaijan in Southern Caucasus has become a key economic player due to its great oil and natural gas reserves. Oil and gas account for about three-quarters of Azerbaijan’s state revenues and 45pc of GDP.
The entire country has been able to modernise, rapidly transforming itself into an upper-middle-income country, possibly because of the huge revenues from the oil business. The last 15 years marked a paradigm shift in the economic, social, political, and cultural development of the country.
In spite of a poverty rate of above 50pc, Azerbaijan is not a poor country. Its GDP per-capita is above $18,179, rich enough to provide its nation whatever it needs for the next century. But the majority of wealth is in the hands of a bunch of people who do not respect the government and law.
Corruption remains widespread. Over the recent years the economy of the country has more than tripled in size. The rapid economic development can be attributed to the exploitation of hydrocarbon resources.
With ample natural resources in the hydrocarbon sector, Azerbaijan is highly dependent on mineral products. According to the World Bank, Azerbaijan’s GDP halved from around $74.2billion in 2014 to just under $37bn in 2016.
The economy had a modest recovery in 2017 as a favourable external environment supported non-oil economic growth, but this was offset by a decline in oil production. The non-oil sector rebounded by 2.7pc, supported by benign public financing, stronger external demand, and improved confidence in response to recovering oil prices but oil GDP contracted by five per cent despite higher oil prices.
The World Bank expects significant growth in the next two years. GDP will grow by 1.8pc in 2018 and 3.8pc in 2019. The IMF economic growth projects GDP to grow two per cent in 2018 and 3.9pc in 2019.
The country is facing a number of challenges, including rising inflation and especially its excessive dependence on the oil and gas sectors, which represent 88pc of exports and 52pc of fiscal revenues.
Though the country’s financial situation remains in good condition due to the large assets accumulated by the Oil Fund (SOFAZ), gross external debt rose from 16pc of GDP in 2014 to 39pc in 2016 and is estimated at 55pc at end-2017.