Azerbaijan, Baku / corr. Trend I.Khalilova / The economy in Azerbaijan grew by a record 34.5 % in 2006, surpassing the 26.4 % growth achieved in 2005, mentioned by the report of the European Bank for Reconstruction and Development (EBRD).
GDP growth was led by a rise in industrial production of 36.6 % during the year. The main source of growth was new oil production and high oil prices, as the sector benefited from increased export opportunities with the opening of the Baku-Tbilisi-Ceyhan (BTC) pipeline. The oil sector accounts for more than three-quarters of the industry. The non-oil sector grew by an estimated 7.5 % during 2006. This was partly due to spill-over effects from the oil industry and could be seen particularly in the machinery, chemical, construction and telecommunication sectors. However, agriculture grew by only about 1 %. Budget revenues almost doubled in 2006 as a result of surging oil revenues, leading to a fiscal surplus of about 0.5 % of GDP. This is despite an increase of more than 80 % in public spending, particularly on the construction of infrastructure and transport. The large increase in oil exports, growth in domestic demand and continued wage increases have exerted upward pressure on monetary growth. Oil exports, which account for about 93 % of total exports, surged during the same period, increasing by 75 %. At the same time, imports, which were associated mostly with oil and gas development projects, grew only 24.0 % as major capital investments were completed. This led to a large trade surplus of about 39 % of annual GDP compared with a surplus of 26 % at the end of 2005. The government has continued to reduce its external debt, which stood at 9.9 % of GDP at the end of 2006 compared with 13.1 % of GDP at the end of 2005.
The EBRD forecasts the growth of the GDP in 2007 at 25 % against 34.5 % in 2006. The basic State balance will decrease by 1.7 % in regard to GDP in 2007, against increase of 0.5 % in 2006.