The financial crisis directly affected the consumer expenditures in the European countries and the USA. Europeans and Americans began to spend less money, limiting their expenditures for goods and services.
Since 2008 Americans economize on luxury. Then they stopped to buy goods costing more than $1,000, including not only cars, but also furniture, home appliances and electronics. The crisis obliged the U.S citizens to economize on medical treatment. They refuse from medicines and recommended medical procedures.
But Europeans economize on food as well. Most of them are obliged to buy cheap goods and stop going to restaurants. The obligatory part of culture for Greek and Italians is to eat in restaurants, but presently, they prefer to eat at home. Europeans reduced expenditures on books which greatly affected book shops and publishing houses. Moreover, Europeans reduced expenditures for tourist trips as rest is much cheaper at home.
According to official statistics, there is no reason to think over huge consumer collapse in Azerbaijan. According to the State Statistics Committee, consumer goods in amount of 939.5 million manat were sold to the population by Azerbaijani trade centers in January which is 10.3 percent more compared to the same period of 2008. Nearly 620.9 million manat of total sum spent on consumer purchases was expenditures on foodstuffs, 318.6 million manat -non-food. Growth of sale on both kinds of goods compared to January 2008 totaled 10.4 and 11.2 percent accordingly. Paid services totaling 310.1 million manat, which is 20.1 percent more, were rendered last month.
The reason that the consumer market of Azerbaijan did not incur reduction is that firstly Azerbaijani citizens become aware of the crisis from the news sources and prefer to spend money fearing devaluation.
Secondly, taking into account that in addition to the salary, the European and American population have incomes, spent on consumption, from investments and savings in private funds, it is possible to know why their consumption reduced significantly. The investment profitability and amount of loans significantly reduced due to the financial crisis. It mainly affected the consumer expenditures in the European countries and the USA. In Azerbaijan, where the fund market has poorly developed, the incomes from this segment of economy are small.
Thirdly, increase in the nominal volume of the consumption of Azerbaijani population is also linked with the growth of inflation rates, which in 2008 averaged 20.8 percent compared to 2007.
Admittedly, people prefer foodstuffs to consumer durables during crisis which leads to rise in demand for foodstuffs. Once consumer goods prices is up, the people try to cut more elastic demands such as oil, diary, meat, eggs as much as they can and focus on essential goods such as pastry products, cereals and bread.
In 2008, Azerbaijani population purchased 64.4 percent of foodstuff and 35.6 percent of non-foods. Sale of foodstuffs increased 10.7 percent and non-foods 30 percent. Vegetables account for 16.7 percent, fruits and berries 16.4 percent, meat and chicken 15.4 percent, bread 6.7 percent, butter 4 percent and candy 4.1 percent.
As to nonfoods, clothing and knitted wear accounts for 20.2 percent, oil products 18.6 percent, cars, cars 7.5 percent, shoes 6.2 percent, electric equipment 4.6 percent and building materials 4.6 percent.
Compared to 2007, foodstuffs consumption kept on leading in 2008 as well. Nonfoods saw a slight change which is must be noted during the financial crisis. In 2007, car expenditures were second to clothing expenditures. In 2008, local banks reduced consumer lending which led to decline in demand for cars.
Like developed countries, Azerbaijan will also see fall in demand for consumer durables and services. The fall in the consumers' demand will be less painful as the local consumer market has not yet developed properly.
Retail trade turnover and services made up 18.8 percent in 2008. According to the State Statistics Committee, volume of retail trade was 1, 087,000,000 manat which is 16.1 percent more than the 2007 indicator. Volume of services offered to population was 3,393,000,000 million manat which is 29.7 percent more than the 2007 indicator.
However, if the crisis is systematic in our country, it will have a negative effect on domestic consumer market. But it is less likely to large scaled as European and American markets.
For example, if lending by Azerbaijani banks do not surpass 18.85 percent of GDP in 2008, the bank lending makes up only 40 percent of the GDP in developed countries.
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