General economic situation

The Gross Domestic Product of Azerbaijan increased by 27.1% and made up AZN 16.608mln within January-September 2007. The growth rate made up 6.9% which is less than the same period of 2006.

Fall in rate of GDP caused by decrease in oil export, particularly, interruption of oil export by the Azerbaijani International Operation Company (AIOC). AIOC clarified the interruption due to repair in oil production platforms within ten days.

Decrease of the export made up to 11% or $4,315,9mln, but import - $3,907,4mln. The trade turnover decreased by 4.7% or $8,223,3mln. Generally over the recent nine months, 4963 tons of oil, 1,077,200 to of diesel fuel, 604,400 t of mazut were exported from Azerbaijan.

The decrease of the export will affect the indices of GDP volume in the next months as well. However, despite this for the GDP volume Azerbaijan goes ahead not only CIS countries, but also Eastern European countries.

Rise was observed in non-oil sector of Azerbaijan by 8.9% within nine months of 2007. Considerable factor is the beginning of the export of own sugar in volume of 236.000 tons from this year. In addition, production of tractors (331 were produced), cars (489) and televisions (6285) began in the country.

The drop in the rates of economic growth may be explained not only decrease of the growth rate in the industry, but also in the sphere of communications and paid postal services, as well as investment allocations. Over the recent three quarters, the industrial production and services increased by 27% and made up AZN 13280.3mln. The growth in 2006 made up 39.2%. The decrease of the growth rate in the industry is explained through 0.9% decrease in the volumes of production in the State sector. It is linked with the sharp decrease of the chemical production (47.1% fall in the production because at the beginning of the year, the chemical enterprises ceased its activity due to increase of energy resources), electricity, gas and water (7.8%). Special weight of production in the public sector and services comprised only 21.2%.

The dominant role of oil and gas production is continuing in the GDP because their production is increasing. The oil production made up 30.797mln tons and gas production - 7 538.7mln cu.m under growth of 52.2%.

Moreover, rise was observed in the production of plastic and rubber wares by 49.6%, machine and equipment by 82.3%, transport means by 2.3 times, production of wood and wooden wares by 30.5%, non-metallic mineral substances 22.7%.

In January to September 2007 growth rate in agrarian industry rose as compared to last year. So, the output increased by 5.1% against 1% in 2006.

The investments put in major capital fell inconsiderably. A total of AZN 4518.6mln was invested in economy at the expense of all sources, which is 15.1% up as compared to 2006 when it was 16.4%. The major reason for drop in investments is growth in demand by the construction of industrial facilities in this sector, where AZN 3712.8mln or 82.2% of all investments was spent.

Thus, growth rate of consumer demand continue drop. The turnover of retail good turnover rose 14.9%, while the community services grew 33.1%. The growth rate of commercial services increased, while in the retail goods turnover fell, as it seems on the results of 2006, when the rise comprised 12.6% and 40.1% respectively.

Major part of demand was satisfied at the expense of import, which grew by 3.26%. The volume of import made up $3907.42mln, or 10.97% less as compared to last year. The foreign trade ended in balance with $408,426mln in red.

Major reason for rise in import operations was increase in the amount of furniture, pharmceutics, food products, ferrous metal and ware of it, wood and products made of it.

Value Added Price In bn manats Special weight, in % Real rise, in %
GDP in total 16 608,0 100,0 127,1
production of goods 11 710,0 70,5 134,1
including - industry  9616,8  57,9  140,2
- agriculture 865,2 5,2 104,7
- construction 1228,0 7,4 111,2
Production of services 3564,3 21,5 111,2
Including: - transport  902,6  5,5  115,4
- communications 281,2 1,7 119,9
- trade and repair 953,9 5,7 114,9
- hotels and restaurants 149,1 0,9 126,9
- social and different services 1277,5 7,7 103,1
Net taxes on products 1333,7 8,0 109,3
Defliator 100,8  

Sources: State Statistics Committee, calculations by Trend

In January to September 2007, the growth rate of prices on consumer goods and tariffs on services went up by 16.4%. According to the State Statistics Committee, in this period the price on food products increased by 15%, non-food products - 11.1%, whereas tariffs on services rose 26.5%.

The State Committee fixed in September 2007 that prices of bakery rose 0.5%, tea and coffee - 0.8%, beer - 1.7%, alcohol drinks - 1.9%, oil and fats - 2.7%, dairy, cheese, and eggs 6.3%, fish - 3.3 and vegetable - 3.9%. However, prices of fruits fell 3.6%.

As a result of January to September the net incomes of the population rose 39.8%, and comprised AZN 9115.3mln. The net incomes dropped 18.6% as compared to last year.

Major tendency at the fiscal market was the consolidation of manat rates with respect to dollar. A tendency on increase of rates, observed over the past period, reflects the real state and is linked with increase of oil revenues in the country.

The National Bank of Azerbaijan (NBA) holds the policy of floating rate as a factor retaining inflation. In the other hand, serious developments are observed worldwide. This depreciation of dollar in regard to world leading currencies and it is seemed not pass by Azerbaijan. On his respect , the re-evaluation of assets in dollar is done. The process will take place in Azerbaijan, too.

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