Economic development

Past 2 years, especially 2009 has been very challenging period for the world countries in terms of alleviating the impacts of world economic crisis on domestic economies. Some countries have faced unprecedented difficulties to overcome the economic crisis and restore the growth and stability, whilst some others had to admit the tragic decline of the economy. The evaluations of international financial institutions, especially International Monetary Fund generates a better outlook of consequences of world economic crisis which indicates shrunk of 1,1% in world economy and 11% in world trade turnover. Thanks to sustainable and farsighted measures taken during the recent years the situation of economy in Azerbaijan has been quite heartwarming.

It's very important to mention the following basic macroeconomic figures in order to prove the results of successful policies in this framework. In 2009 Azerbaijan has experienced 9,3% GDP growth (GDP for 2009 was 34,578 billion manats, approx. 43,04 billion USD). Showing 7,9%, increase the GDP per capita equaled to 4874 USD. The industrial growth has been 8,6%, which implies that the industrialization of the economy has been carried out progressively. This is a historical accomplishment. It can be fairly argued that the economic growth relies on the oil industry to some extent; therefore diversification has been determined as the most priority government policy. Thus 3,5% agricultural growth has served as a handy result of diversification of economy. It should be noted that oil and gas industry in the country develops more rapidly nowadays when compared with previous years. Therefore the sector will obviously remain as a main revenue generator in the next years, creating more opportunities for enhancing non-oil sector.

Although, 2009 has been successful period in terms of the maintaining welfare of the economy, situation in 2008 was quite different in terms of the high inflation rate. The rapid growth of economy during 5 years obviously affected the consumer prices in the country. On the other hand the unexpected sharp decline, approximately 1,5 times decrease of oil prices in the world market compared to 2008 has had detrimental effects on the economy. In this context the Government encountered different risks, such as devaluation of national currency and heightening inflation. However, despite 21% inflation rate in 2008, the Government of Azerbaijan achieved to bring down the rate to 1,5% in 2009. All these facts entitle us to say that the Government of Azerbaijan in contrary to negative tendencies in entire world influencing national economies could maintain the macroeconomic stability.

As a main consequence of world financial crisis we also witnessed significant shrink of financial resources which hindered investment in entire world and discouraged the companies to realize their business opportunities. But the Government of Azerbaijan by mobilizing all opportunities could maintain the inflow of foreign direct investment. As a result in 2009 the amount of investments reached 9,2 billion USD, totaling 87 billion USD in the period of 2004-2009. In 2009 the Government initiated gigantic projects which have been the cornerstone of domestic investments. Construction of waste management plant worth 400 million USD was a leap towards improving ecological situation in Baku. Along with this project partial exploitation of "Sumgayit Technopark" will pave the way to attract 100 millions USDs to construct at least 10 new plants in that area.

Strategic currency reserves of Azerbaijan have increased dramatically in the base year totaling 20,4 billion USD. This entitles the Government to maintain the macroeconomic stability and realize all social and infrastructure related projects in upcoming year.

As known, in order to regain welfare and retain their existence particularly private companies in the world had to fire the employees, thus creating a troop of unemployed people. However the Government of Azerbaijan could establish 74 thousand new jobs in 2009. It should be stated that 840 thousand jobs has been created in the last 6 years. Also it is very important to mention that in the last 6 years the Government could reduce the rate of poverty down to 11% which used to be 13,2 % in 2008 and 50% in 2003.

Last year the Government has a made a very generous step aimed at increasing the welfare of citizens. The Government crossed out the arrears of natural gas bills of people accumulated since the early period of independence. This worth almost 400 million USD, if we bear in mind that the approved state budget for 2010 is approximately 12,65 billion USD. To enhance domestic energy security the Government has reiterated his commitment to gasify all the regions of the country.

All these facts highlight that Azerbaijan economy could survive during the test period. 2009 has marked the end of the transition period to the market economy and from now on Azerbaijan will enjoy pure liberal economy, based on fair competition. The facts shouldn't impose such an impression that the crisis hadn't affected the national economy at all. Unfortunately, in 2009 trade turnover had significantly decreased and equaled to approximately 20 billion USD which used to be 54 billion USD in 2008.

As a conclusion, a common understanding prevails that the crisis has revealed the opportunities and potential of countries to fight against this trouble. During this period Azerbaijan economy has proved to be sustainable and considerably less vulnerable to exogenous shocks. In the upcoming year the Government will focus again on macroeconomic stability, strengthening control on inflation and consumer prices, protecting domestic market through substitution of imports with domestically produced industrial goods.

04.02.2010

Azerbaijan in figures

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