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GENERAL ECONOMIC SITUATION

Analysis Materials 8 July 2005 19:21 (UTC +04:00)

In January to May 2005 the GDP grew 5.7% in Azerbaijan as compared to 2004. The GDP grew 16% and made up 19.8trln manats at current prices.

Growth pace of industrial production went up in this period and attained 19.4%. The growth was possible at the expense of commencement of the bulk oil production from the Azeri-Chirag-Gunashli fields.

The growth of production in the agrarian sector dropped 4.9% in the first quarter of 2005 against 0.4% in 2004.

The investments put in major capital reduced. Growth pace of investments maintained impeding effect in February. A total of 10.6trln manats was invested in economy, which is 14.5% down as compared to the first quarter of 2004.

Thus, growth pace of consumer demand rose. The turnover of retail good turnover rose 12.2%, while the community services grew 16.9%.

VAP

In bn manats

Special weight, in %

Real rise, in %

GDP in total

19839,1

100

16,0

Good production

12124,7

61,1

21,7

Including

Industry

9331,4

47,0

30,1

Agriculture

486,2

2,5

104,9

Construction

2307,1

11,6

102,2

Production of services

6234,4

31,4

108,6

Including

Transport

1437,9

7,2

108,6

Communications

456,8

2,3

131,2

Trade

1832,8

9,2

112,2

Hotels and restaurants

177,6

0,9

139,7

Social and informal services

2329,3

11,7

101,5

Net taxes on production

1480,0

7,5

6,9

Deflator

110,7

Sources: State Statistics Committee, calculations by Trend

Major part of demand was satisfied at the expense of import, which grew by 44.49% and comprised $1.76bn. The volume of export made up $1.06bn, or 5.82% up as compared to last year. The foreign trade ended in balance with $0.7m in red.

Growth pace of consumer prices beat the record and made up 13.4% in March. Rise in foodstuff prices tariffs was the key factor intensifying inflation.

As of 1 June net incomes of population grew 25.4%, comprising 14.1trln manats.

Net incomes of population grew 6.2%, whereas the growth pace of inflation gained 7.5%.

Despite fall in real incomes from deposits as a result of rapid growth of prices and consolidation of manat in regard to US dollar, savings of physical entities went on growing. As of 1 May 2005, the amount of savings summed up 2.12trln manats and exceeded the similar figure of last year by 39.1%. Growth pace of deposits turned out 23.1% down as compared to January to May of 2004 (62.2%).

In April the major tendency in the financial sector was rise of manat rates in regard to USD - it rose 45.4 points to 4785,19 manats per US dollar. The key reason of rise in manat rates was the aspiration of the monetary authorities not to cause additional inflation at the expense of fulfillment of go and currency reserves.

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