General economic situation

2008 is characterized through dynamic development of Azerbaijan's economy against the background of the global financial crisis.

The Gross Domestic Product (GDP) of Azerbaijan increased by 10.8% and totaled AZN 38bln in 2008. Although the indicators of GDP growth in 2008 was two-figure, they were lower than forecasted due to the reduction in economic growth in the last two months of the year. The amount of the GDP per capita composed AZN 4439.9 ($5403.9), increasing by 9.5%. The GDP growth rates during this period were 14.2% less than the same period of 2007.  

The drop in the rates of economic growth may be explained not only decrease of the growth rate in the industry (18%), but also in the sphere of cargo transportation (5.9%), paid services (4.1%) and money incomes of population (4.9%).

In January to November, the industrial production and services increased by 6.8% and made up AZN 26745.2mln. The growth in 2007 made up 124.7%.  

The amount of the production in all spheres of the economy increased by 9.6% and made up 70.8% of the GDP where 57.4% (AZN 21.8bln) fell on industry. The specific weight of the service sector in the GDP made up 22.1%. Net taxes from the production and import reached 7.1% in the GDP.   

Source: State Statistics Committee

The decrease of the growth rate in the industry is explained through decrease in the production of transport means (9.6%), electric, optical and electronic equipment (30.6%), etc. And the decrease in the cargo transportations resulted from breaks in the oil and gas transportation and reduction in the railway cargo transportation due to the fire on the Turkish section of Baku-Tbilisi-Ceyhan pipeline and Georgian-Ossetian conflict.  

As a result of measures taken to develop non-oil sector, the real GDP increase in this sector in 2008 was 15.7% as compared to the forecast of 12%. However, the dominant role of oil and gas production is continuing. In 2008 the oil production increased by 104.6%, gas production - 150.4% and oil refinery - 108.4%.

Over the reported period, the growth rates in the extractive industry were at the level of 5.3%, composing AZN 21.5bln with specific weight of 76.6% of the gross industrial production. However, growth rates in the processing industry were 7.4%, totaling AZN 5.24bln (18.7%), electricity, gas and water - AZN 1314.7mln with the increase of 7.7% and specific weight of 4.7%.

Over the reported period, the growth in the sphere of metallurgical industry and ready production from the metal was 23.3%, chemical production - 34.2%, production of the skin and skin wares - 27.2%.

Growth was recorded in the public production sector which totaled 5.1% 2008. The specific weight of the industrial production and services in the public sector made up 18.8% (AZN 5277.8mln) of all industrial production and private sector - 81.2% (AZN 22774.1mln). Growth in private sector was 6.2%.   

Growth rates in the agrarian production because of the state support to the agrarian sector, subsidies and privilege credits for farmers, improvement of the leasing service, development of entrepreneurship in 2008, increased by 2.1%. In 2008 the volume of agricultural production increased by 6.1%.

In addition, growth was observed in import and export operations. Azerbaijan's export increased by 688.29% up to $47756.2mln and import - $7163.5mln (25.38%), and the red ink reached $40592.7mln. Nearly 97% of the export operations fell on oil and oil products. Export of oil increased by 13.7 times as compared to the last year.

Growth rates of investments in the economy of the country also increased. Nearly AZN 9073.6mln was invested in the economy of Azerbaijan in 2008, an increase of 34.3% from the figures of 2007. The specified forecast for 2008 totals AZN 8429.2mln, with an increase of 12.8%, and factual allocations in reached 7.64% of the forecast. The growth in the investments is explained through implementation of large-scale construction works in the transport sector, as well as demand for construction of production facilities.    

Consumer demand somewhat reduced growth rates. In 2008 the volume of retail commodity turnover grew by 16.1%, paid services - 29.7%. For the comparison, in 2007 the volume of retail commodity turnover grew by 15.3%, paid services - 33.8%.

Prices of the food products fell in December by 1.0%, and nonfood products remained unchanged and service tariffs rose by 0.1%. The State Committee fixed in December 2008 that the prices of sugar and chocolate reduced 0.5%, oil and fats - 1.8%, meat products -1.9%, tobacco - 0.1%, bakery - 8.1.

Growth in prices was observed for tea and coffee - 0.8%, beer - 0.2%, alcohol drinks - 0.2%, dairy, cheese, and eggs 2.3%, fishery - 2.7%, vegetable - 3.7%, , fruits - 1.7%. In 2008 the growth rates in the inflation as compared to the same period of 2007 were 20.8%. The same figure in 2007 was 16.7%.

In 2008, the nominal income of the population totaled AZN 20058.2mln, which is 37.8% more as compared to 2007. During this period, the nominal income per head made up AZN 2343.2, which exceeds the figure in 2007 by 36.2%. The rise in salaries in various spheres of economy and rise in social benefits also contributed to the growth in population income.

As a result of December, the exchange rate of the national currency with respect to the USD increased by 78 points. The rate of the USD in Azerbaijan during the month reduced from 0.8088 AZN/USD to 0.8010 AZN/USD. Unlike USD, in December the rate of Euro in Azerbaijan rose by 1033  points (from 1.0259 AZN/EUR to 1.1292 AZN/EUR).  

In December the rate of manat in relevant to the USD composed 0.80 manat, Euro - 1.09 manat, Russian ruble - 2.87 manat for 100 rubles. In 2008 these indices respectively composed 0.82, 1.21 and 3.32 manat.