Baku, Azerbaijan, Dec. 26 / Trend /
Ellada Khankishiyeva, Trend Analytical Center Head
There are a few days before the New Year. It is time to summarise the economic results of 2011. During the year the Azerbaijani economy is characterised by sustainable development. The GDP growth rate by the end of the year was 0.2 per cent, reflecting a downturn in the global market. The crisis of the Eurozone remains a major threat to global economic growth. On the other hand, the U.S current financial situation and the inability of the country's political forces to agree on the ways of correcting it, cause great concern worldwide.
However growth conditions of the domestic economy were not significantly changed.
Firstly economic growth was supported by raising the population's income, leading to increased consumer demand. The activation of the government's social policy and the growth of private sector's earnings contributed to an increase of the population's nominal income in January-November by 19.2 per cent and the average wage in the economy - by 8.7 per cent to 355.7 manat. As a result, the volume of retail trade turnover increased by 10.3 per cent and the service industry market - by 7.4 per cent. The growth of the consumer market this year was the highest for 20 years.
Secondly, investment demand continued increasing. Its volume exceeded the amount of consumer demand. Investments made in main capital increased by 28.3 per cent and hit 10 billion manat during the first 11 months of 2011. We will see the steady growth in investments in capital construction due to the growth of construction, rehabilitation and reconstruction operations while preparing for the Eurovision Song Contest 2012 in Baku till May 2012.
It should be noted that about 73.6 per cent (7.373.9 billion manat) of main capital is aimed at developing the non-oil sector of the country, while 26.4 per cent (2.643.3 billion manat) - oil sector.
The Azerbaijani non-oil sector increased by 9.5 per cent during late 2011 and this corresponds to the government's tasks to develop the non-oil sector, to reduce dependence on oil and gas factor and thus to diversify the economy. 2011 was declared the Year of Tourism in Azerbaijan.
This year, domestic production failed to fully utilise the potential of economic growth. Thus, the industry responded by a five per cent drop to the high rates of investment and consumer demand. This is stipulated by the decrease in oil and gas production. It reduced by 10.2 per cent and 2.6 per cent compared to January-November last year.
Despite the fact that there was a decline in the oil sector, there was growth in all areas of non-oil industry. The total growth rate reached 9.7 per cent. The best results were demonstrated by the Azerbaijani telecommunications sector. It increased by 12.4 per cent by late 2011. It proves once again that it has become the fastest growing sector of the national economy.
The country's agriculture increased by 6.8 per cent. The main principles of Azerbaijani agrarian policy are the innovation of its industry, improving efficiency and coordination of the interests of producers, processors and consumers. It should be noted that the Azerbaijani agrarian sector has also great export potential.
Today, the main part of Azerbaijani exports includes oil and oil products (87 per cent). In the future, the country plans to increase oil exports. SOCAR's subsidiary - SOCAR Trading plans to increase oil sales in Asia.
For 11 months, export operations in Azerbaijan amounted to $24.643 billion or 27.01 per cent more compared to the same period of 2010.
However, taking into account the strategy of the Azerbaijani government to develop the non-oil sector and diversification of the country's export capacity, increasing the non-oil export of Azerbaijani goods to foreign countries is inevitable. So, in 2012 the share of non-oil exports in Azerbaijan's total exports will hit 7.6 per cent. By late 2015, this figure will increase and hit 10.23 per cent.
The stabilisation of the manat remains the main trend of the financial market for 2011. Since early 2011 the Azerbaijani Central Bank (CBA) has been selling its exchange rate policy in the context of expanding the supply channels in the foreign exchange market and a new operational mechanism. The manat rate strengthened during the reporting period. The CBA sterilised the currency to prevent excessive strengthening. This could have a negative impact on the competitiveness of the non-oil sector. At present, the CBA's currency intervention amount exceeds $ 620 million.
While carrying out the exchange rate policy, the CBA focuses on the inflationary processes and the competitiveness of the country. The Central Bank fully abandoned the use of dual currency (dollar / euro) basket while determining the exchange rate of manat. It switched to a bilateral (manat / dollar) exchange rate from January 10, 2011.
The government's targeted monetary policy contributed to the fact that the inflation rate was simple during the year. Consumer prices and tariffs for services in Azerbaijan in November 2011 increased by 1.1 per cent compared to October. The inflation hit 8 per cent in January-November over the same period of last year.
The stabilisation of the manat rate caused a flow of funds to the stock market. This stimulated the development of the securities market. In May 2011 the Azerbaijani president approved the state programme on the securities market development for 2011-2020. The state programme was adopted to improve the Azerbaijani securities market in accordance with international practice and the expansion of financial services to the population and economic entities.
The state programme on the socio-economic development of Baku and its urban settlements in 2011-2013 is also important in developing the country's economy.
It was approved by the Azerbaijani President in May this year. The transformation of Baku into a metropolis is one of the priority issues in Azerbaijan.
The 2011 results give grounds to say that these are positive trends and will be continued next year.