General economic situation

Analysis Materials 16 September 2008 12:01 (UTC +04:00)

The Gross Domestic Product (GDP) of Azerbaijan increased by 16.7% and made up AZN 23bln in January to July 2008. The growth rate made up 17.8% less than the same period of 2007.

In January to July the production of the industrial products and services increased by 14.1% totaling AZN 18591.1mln.

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 agriculture, cargo transportation and paid services. In January to July, the industrial production and services increased by 14.1% and made up AZN 18591.1mln. The growth in 2007 made up 34.7%.

The decrease of the growth rate in the industry is explained through decrease in the volumes of production of machines and equipment (decrease of 1.5%), transport means (24.7%), etc.

The amount of the GDP per capita made up AZN 2696.2 ($3248.1), an increase of 15.4%.

The amount of the production in all spheres of the economy made up 75.9% of the GDP where 64.2% (AZN 14779mln) fell on industry. The specific weight of the service sector in the GDP made up 17.2%. Net taxes from the production and import made up 6.9% in the GDP.

Value Added Price In mln manats Special weight, in % Real rise, in %
GDP in total 23017,1 100,0 116,7
production of goods 17462,8 75,9 118,8
including - industry 14779,0 64,2  117,7
- agriculture 1150,8 5,0 109,3
- construction 1533,0 6,7 135,0
Production of services 3963,0 17,2 110,6
Including: - transport 952,8 4,1 110,4
- communications 331,9 1,5 134,3
- trade and repair 1204,8 5,2 114,7
- hotels and restaurants 200,5 0,9 134,0
- social and different services 1273,0 5,5 101,0
Net taxes on products 1591,3 6,9 114,5
Defliator 130,6

Sources: State Statistics Committee

The dominant role of oil and gas production is continuing in the GDP because their production is increasing. The oil production made up 28,757,300 tons, an increase of 14.8% and gas production - 13934.9mln cu.m under growth of 68.6%.

Over the reported period, the growth rates in the extractive industry were at the level of 15.3%, composing AZN 14 786.57mln with specific weight of 79.5% of gross industrial production. However, growth rates in the processing industry were 7.2%, totaling AZN 3047.2mln (16.3%), electricity, gas and water - AZN 757.35mln with the increase of 8.3%.

Unlike previous months, growth was recorded in the public production sector which totaled 104.6% in January to July. The specific weight of the industrial production and services in the public sector made up 17.9% (AZN 3323.2mln) of all industrial production and private sector - 82.1% (AZN 15267.8mln). Growth in private sector was 116.4%.

The chemical production increased by 57.8% as compared to the same period of 2007.

Growth rates in the agrarian production because of the collection of the high harvest of grain in July increased by 6.6%. In January-July the volume of production increased by 9.3% (for the comparison in January - July 2007 increase was 2.7%).

In addition, growth was observed in import and export operations. The growth of the Azerbaijani export equaled ten times up to $34678.3mln and import - $3900.2mln (35.81%). Nearly 97.54% of the export operations fell on oil and oil products. Export of oil increased by 17.2% as compared to the last year. During the reported period, nearly 61.4mln tons of oil ($32526.8mln) were transported from Azerbaijan via pipeline and railway.

Growth rates of investments in the economy of the country also increased. Nearly AZN 4532.1mln was invested in the economy of Azerbaijan over the period of January and July 2008, an increase of 34.2% from the figures of the last year when the increase totaled 11.3%. Moreover, internal investments prevail above the external investments, their share in the total amount of investments are respectively 69.9% and 30.1%. The increase is explained through large-scale construction works in the transport sector, demand for investments in the construction of production facilities.

Consumer demand somewhat reduced growth rates. During January-July the volume of retail commodity turnover grew by 15.2%, paid services - 29.4%. For the comparison, in January - July 2007 the volume of retail commodity turnover grew by 14.6%, paid services - 32.7%.

In July the growth rates in the prices of the consumer goods and tariffs on the services made up 0.3% as compared to June 2008 and in January - July the growth rates in the inflation as compared to the same period of 2007 were 20.9%. Over the reported period, the prices for foodstuffs grew by 29% and non-foodstuffs by 10.9%, and prices of the services - 11.3%.

Prices of the food products fell in July by 1.4%, but nonfood products increased by 0.6%. The State Committee fixed in June 2008 that prices of bakery rose 0.2%, tea and coffee - 1.9%, beer - 1.0%, alcohol drinks - 0.5%, oil and fats - 0.3%, dairy, cheese, and eggs 0.7%, meat products - 0.4%, tobacco - 2%, but prices decreased for fruits by 6.9%, vegetable - 8.2%, fish - 1.1%.

As a result of January to July 2008, the nominal incomes of population grew by 34.6% as compared to the same period of 2007 and made up AZN 10860.6mln. During this period, the nominal incomes per capita totaled AZN 1272.2, which is higher than the index of January - July 2007 by 33%. The increase in the incomes of population was caused by rise in wages in different sectors of economy and increase in the social benefits as a whole in the country. However, the growth rates of the nominal incomes of population decreased 33% as compared to the same period of the last year.

Basic tendency in the financial market during January-July remained strengthening the rate with respect to the USD. This year the Government of Azerbaijan expects 5% strengthening in the exchange rate of national currency with respect to the USD, up to AZN 0.81. These forecasts are laid in the macroeconomic forecasts for 2008.

In July the rate of manat in relevant to the USD composed 0.81 manat, Euro - 1.27 manat, Russian ruble - 3.46 manat for 100 rubles. In January-July these indices respectively composed 0.83, 1.28 and 3.48 manat.