General economic situation

Analysis Materials 7 February 2008 12:01 (UTC +04:00)

The Gross Domestic Product (GDP) of Azerbaijan increased by 25% and made up AZN 25228.1mln in 2007. The growth rate made up 9.5% which is less than the same period of 2006. The GDP per capita totaled AZN 2980.9 ($3473,9), an increase of 23.6%.

Last year the general amount of the production in all spheres of economy totaled AZN 36.9bln.

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 4.93% or $6058.3mln, but import - $5 708.6mln (8.39% increase). Last year, 6,313,700 tons of oil and 3,118,800 tons of oil products were exported from Azerbaijan.

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. Over the recent eleven months, the industrial production and services increased by 24% and made up AZN 20247.8mln. The growth in 2006 made up 36.6%.

The decrease of the growth rate in the industry is explained through decrease in the volumes of production in the State sector. It is linked with the sharp decrease of the chemical production (33.6% 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 (7.6%).

Special weight of production in the public sector and services comprised 22.6%.

As a result of realization of the oil strategy, record indicators were reached in oil and gas production. However, the growth was observed in other spheres of economy as well. Last year production of Belarus tractors and MAZ trucks commenced in the country. After 8 years break, iodine production was re-established, as well as new computers began to be produced.

The dominant role of oil and gas production is continuing in the GDP because their production is increasing. The oil production made up 41.658mln tons, an increase of 29.4% and gas production - 11 041.1mln cu.m under growth of 81.6%.

Moreover, rise was observed in the production of plastic and rubber wares by 42.9%, machine and equipment by 57.7%, transport means by 23.3%, production of wood and wooden wares by 6.6%, construction materials by 28.8%.

The growth rate in agrarian industry rose as compared to last year. In 2007, the production rose by 4% compared to 2006.

The investments put in the country's economy also increased. A total of AZN 6774.8mln was invested in economy at the expense of all sources, which is 17.8% up as compared to 2006 when it was 14.8%. The major reason for drop in investments is the completion of the construction works within the large oil projects, but growth was observed in demand by the construction of industrial facilities in this sector, where AZN 5307.2mln or 78.3% of all investments was spent.

Thus, growth rate of consumer demand continues drop. The retail good turnover rose by 15.3%, while the community services grew 33.8%. The growth rate of retail goods turnover and commercial services increased in 2006, when the rise comprised 13.5% and 42.1% respectively

Value Added Price In bn mantas Special weight, in % Real rise, in %
GDP in total 25 228,1 100,0 125,0
production of goods 18 293,0 72,5 129,9
including - industry  14 926,1  59,2  135,0
- agriculture 1564,5 6,2 104,0
- construction 1802,4 7,1 116,0
Production of services 5094,6 20,2 112,5
Including: - transport  1054,8  4,2  113,6
- communications 470,6 1,9 132,0
- trade and repair 1325,6 5,2 115,3
- hotels and restaurants 159,0 0,6 135,7
- social and different services 2084,6 8,3 105,4
Net taxes on products 1840,5 7,3 111,2
Defliator 107,7  

Sources: State Statistics Committee

In December 2007, the growth rate of prices on consumer goods and tariffs on services went up by 2.5%. According to the State Statistics Committee, in this period the price on food products increased by 3.6%, non-food products - 0.9%, whereas tariffs on services rose 1.7%.

The State Committee fixed in December 2007 that prices of bakery rose 1.8%, tea and coffee - 1.4%, beer - 1.2%, alcohol drinks - 2.3%, oil and fats - 5.3%, dairy, cheese, and eggs 5.1%, fish - 4.6% and vegetable - 8.3%, meat products - 1.1%, tobacco - 0.1%, fruits - 7.2%.

As a result of 2006, the nominal incomes of the population rose 40.3%, and comprised AZN 14 305.6mln. The nominal incomes increased by 13.8% 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.

On 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.