General economic situation
The Gross Domestic Product (GDP) of Azerbaijan increased by 13.4% and made up AZN 4767mln in January to February 2008. The growth rate made up 28.3% less than the same period of 2007.
The amount of the GDP per capita made up AZN 559.7 ($662.5), an increase of 12.1%.
The amount of the production in all spheres of the economy increased by 14.8% and made up 71.7% of the GDP where 63.5% (AZN 3027.9mln) fell on industry. The specific weight of the service sector in the GDP made up 20.5%. Net taxes from the production and import made up 7.8% in the GDP.
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 cargo transportation and paid services. In January to February, the industrial production and services increased by 13.3% and made up AZN 4 062.8mln. The growth in 2007 made up 40.1%.
The decrease of the growth rate in the industry is explained through decrease in the volumes of production of wares form the rubber and plastic mass (36%), transport means (44.7%), equipment (12.5%).
Growth was again recorded in the Public sector, which made up 4.8% in January to February. The specific weight of the industrial products produced in the Public sector made up 20.4 (AZN 827.699mln).
In addition, growth was observed in import and export operations. The growth of the Azerbaijani export equaled 41.87% up to $626.187mln and import - $494.313mln (26.91%). Nearly 87.8 of the export operations fell on oil and oil products. In January to February Azerbaijan exported 590,378 tons of oil and 189,029 tons of oil products.
The dominant role of oil and gas production is continuing in the GDP because their production is increasing. The oil production made up 7.614mln tons, an increase of 12.1% and gas production - 2617.8mln cu.m under growth of two times. At the same time, Azerbaijan International Operating Company increased oil and gas production by 15.6% and 2.9 times relatively.
Moreover, rise was observed in the production of machine and equipment by 27.5%, production of wood and wooden wares by 52.8%, foodstuffs by 12%, chemical industry - 2.6 times, etc.
In January to February 2008 growth rate in agrarian industry decreased as compared to last year. In January-February, the production rose by 3.8% compared to 2007.
The investments put in the country's economy also increased. A total of AZN 859.9mln was invested in economy at the expense of all sources, which is 20.5% up as compared to 2007 when it was 13.9%. 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 750.5mln or 87.3% of all investments was spent.
Thus, growth rate of consumer demand continues drop. The retail good turnover rose by 14.5%, while the community services grew 29%. The growth rate of retail goods turnover and commercial services increased at the beginning of 2008, when the rise comprised 13.9% and 40.4% respectively
Sources: State Statistics Committee
In January to February 2008, the growth rate of prices on consumer goods and tariffs on services went up by 2.2%. According to the State Statistics Committee, in this period the price on food products increased by 3.5%, non-food products - 0.6%, whereas tariffs on services rose 0.4%.
The State Committee fixed in January to February 2008 that prices of bakery rose 2.4%, tea and coffee - 9.9%, beer - 2.5%, alcohol drinks - 1.8%, oil and fats - 2.6%, dairy, cheese, and eggs 2.5%, fish - 2.6% and vegetable - 4.7%, meat products - 4.5%, tobacco - 0.7%, fruits 7.6%.
As a result of January to February, the nominal incomes of the population rose 33%, and comprised AZN 2625.5mln. The nominal incomes remained unchanged.
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.
According to National Bank of Azerbajan, including the oil sector, the real effective rate (RER) of manat increased by 3.1% in total trade turnover, 3.3% in import and 2.8% in export in January and February 2008 as compared to December 2007.
The study shows that the influence of U.S. share to RER in foreign trade (including oil sector) in January and February 2008 made up 4.6%, that of Europe - 4%, England - 8%, Russia - 1.3%, Turkey - 4%, Iran - 1.8%, and Kazakhstan - 2.7%. The falling influence of Ukraine on the currency made up 0.9%, that of Georgia - 0.7%, Israel - 2.7%, and Japan - 0.9%.
In January and February RER consolidated by 2.7% in non-oil sector, 2.8% in import and 2.1% in export. However, the RER will go on falling gradually.
In January-February, non-oil RER dropped by 8.6% in the general trade turnover (excluding oil sector) compared to December 2000, 6.1% in import, 20.6% in export. Including the oil sector RER dropped by 2%, 3.7% and 0.7% respectively.
The long-standing drop in RER was caused by exceeding inflation growth in Azerbaijan's trade partners' countries over the consumer prices growth in Azerbaijan.
During first two months of 2008, manat's RER growth as compared to the currency of USA, EU, England, Turkey, Russia, Iran and Kazakhstan exceeded the growth rate of manat's nominal rate. At the same time, manat's nominal rate dropped as compared to the currency of EU, Georgia, Kazakhstan, Israel and Japan, and its real rate rose as compared to all currencies, except of that of Ukraine, Georgia, Japan and Israel.
NBA summarized that as a result of a long period (2000 - January-February 2008) manat's RER dropped, which proves acceptability of the conditions for foreign trade with Azerbaijan's main partners. In 2001-2008, Azerbaijan's inflation rate comprised 76.2%, while that of its trade partners amounted to 87.2 %.