Weekly economic review (jan. 16-21)

Analysis Materials 23 January 2012 11:23 (UTC +04:00)

A meeting of the Cabinet of Ministers dedicated to Azerbaijan's socio-economic development in 2011 and the challenges for 2012 and chaired by the Azerbaijani President Ilham Aliyev was held on January 16.

Minister of Economic Development Shahin Mustafayev spoke about Azerbaijan's macroeconomic achievements at the meeting.

He said that Azerbaijan showed a high resistance to the global socio-economic challenges in a difficult external economic sphere. The economic growth continued in 2011 - the year of the 20th anniversary of restoring the independence. New progress was achieved in accelerating the development of the non-oil sector, diversification of the economy, development of entrepreneurship and regions, further raising living standards.

Macroeconomic stability was achieved by maintaining an average annual inflation rate at one level and a stable exchange rate of manat. The ratio of external public debt to GDP, meeting the international requirements, was 7.3 percent, strategic currency reserves exceeded $ 40 billion.

The state budget revenues increased by 37.7 percent to 15.7 billion manat, expenses - by 30.8 percent to 15.4 billion manat. The state budget was executed with a surplus. The amount of funds transferred to the state budget from the Ministry of Taxes, increased by 27.5 percent compared to the previous year, and from the State Customs Committee - by 3.6 percent. Tax receipts for non-state sector increased by 40.5 percent, non-oil sector - 22 percent.

GDP growth was 0.1 percent, its volume per capita exceeded $7,000. Our country's positions among the countries with high average income more strengthened. The structure of economic growth in 2011 differs from those in previous years. Thus, the non-oil sector increased by 9.4 percent, including agriculture - by 5.8 percent, the volume of information and communication services - 11.8 percent, freight transport sector - by 3.6 percent, including non-oil sector - by 9.6 percent, paid services - by 7.8 percent. GDP growth was ensured through the non-oil sector.

Thus, production in non-oil industry increased by 11.1 percent, including the processing industry - by 7.1 percent, the chemical industry - by 27.1 percent, metallurgical industry - by 1.9 times. Production of construction materials increased by 4.4 percent, electric power - by 8.4 percent, foodstuff - by 5 percent, furniture - by 24.5 percent, clothing - by 56.5 percent.

Actual results of industrial policy is the production of heavy machinery and industrial gases in the Sumgait Technology Park, as well as the commissioning of an aluminum plant, the condenser production plant, MDF plants, modern building materials plant, glucose production plant, the reconstruction of Garadagh cement plant and the continued construction of two new cement plants, plant for solid waste disposal, shipyard, solar panels production plant, fuzzy yarn production plant, fertilizer production plant, etc. In general, more than 40 industrial enterprises were built and put into operation in 2011. The construction of 100 industrial enterprises is underway.

The necessary work is conducted to develop energy industry, to accelerate the use of alternative energy sources, to create new production facilities in this area. The Sumgait Chemical Industrial Park, the Balakhani Industrial Park will accelerate the modernization of the economy, form an innovative economy, develop business, reduce dependence on imports, increase non-oil exports, play an important role in increasing employment.

In 2011, the measures of the state support for the agricultural sector were continued. The production and processing of agricultural products expanded on the basis of the intensive methods and modern technologies. The infrastructure of the agricultural sector largely improved. The food security more intensified. The implementation of major regional and local infrastructure projects, including the construction of the Baku-Tbilisi-Kars railway, the Baku International Sea Trade Port, the construction of roads in the international corridors TRACECA, North-South and East-West was continued to expand the transport and transit potential. The new subway stations and the airport were commissioned.

A favorable investment climate in 2011 ensured the growth of investments in the economy. About $20 billion investments were made in the economy of the country, of which $ 13 billion - internal, $ 7 billion - foreign. About $15.7 billion investments fell to the non-oil sector, and $ 4.3 billion - the oil sector. About 5.9 billion manat were invested in transport, ICT, tourism, municipal, irrigation, energy, environment and other areas at the expense of state investment last year and 1.7 billion manat in socially-oriented projects.

The state programs, in particular the programs of regional development that influence Azerbaijan's strategic development have great importance in the achievements.

More than 110 enterprises based on modern technologies were constructed and put into operation in the regions during the year.

At present, more than 200 companies are under construction. The construction and repair of 53 schools, 47 kindergartens, six health care facilities were completed in accordance with the state program on socio-economic development of Baku and its settlements last year. The work in this direction is underway. The necessary work was conducted in the field of electricity supply, gas and heat, communications and information, infrastructure of agriculture, environment, water and sewerage system, road infrastructure and transport, social infrastructure in the settlements of Baku and the regions.

The entrepreneurship development was one of the priorities of economic policy in the period.

The work on further expansion of business activity, increasing the state support for private sector, protection of the rights of employers and elimination of unnecessary procedures was continued.

A single information register of checks was created. As a result of the beginning of business activity registration of physical entities online, the time they spend on registration in tax bodies was reduced from three days to a few minutes. The Internet portal on permits will allow getting all information about the permitting documents and procedures of obtaining them, the documents to be submitted from a single source.

The changes made to the rules of using soft loans, increased the possibility of financing large-scale and long-term investment projects, as well as small business on favorable terms.

About 6,500 new jobs will be created due to the preferential loans worth 138 million manat allocated to 1,643 entrepreneurs by the National Entrepreneurship Fund in 2011. About 75 percent of loans fell to the regions, 25 percent - settlements of Baku. Soft loans amounting to 118 million manat were allocated for 85 major production, processing and infrastructure projects, based on modern technologies. About 33 enterprises were commissioned through these loans in 2011. About 96 enterprises will be commissioned in 2011.

About 91 business forums and conferences were organized in Azerbaijan, 99 in foreign countries and the National Exhibition in Baku to support the implementation of the local entrepreneurs' potential, encourage modern forms of business and expand external relations. The participation of national companies in exhibitions held in the U.S, Europe, Middle East, in Russia was ensured to expand the sales markets of non-oil production.

One of the most important components of state support for entrepreneurship was the enlightenement of the entrepreneurs, learning from international experience, rendering of consulting and innovation services. About 144 events were held last year, 80 of which - in the regions. About 52 entrepreneurs and young managers arrived in Germany to get the practice on the relevant enterprises to increase knowledge and skills.

The consumer prices were regularly monitored. The fairs were organized in Baku during the holidays to better meet the growing demand of the population, to expand the range of products for consumers and to prevent artificially high prices.

The consumer prices have stabilized as a result of increasing production, expanding its storage infrastructure, as well as eliminating the artificially inflated prices. The prices on some food decreased. This trend continues.

2011 was successful in terms of foreign economic cooperation and economic integration into the global economy. The meetings of intergovernmental committees and working groups from 22 countries were held. About 11 loan agreements worth $ 1.7 billion were signed in transport, energy, telecommunications, agriculture, social development and other areas within the cooperation with international financial institutions.

Azerbaijan strengthened its economic leadership in the region. It has become a country that exports investments. It has recently invested $ 6 billion in foreign countries.

The number of foreign partners of our country increased to 150, the foreign trade turnover over 11 months increased by 9.2 percent to $ 33.2 billion, trade surplus amounted to $16.1 billion, exports exceeded imports by 2.9 times. The imports of machinery and equipment increased by 1.7 times by using the modern technologies, fulfilling the requirements to bring the production processes in line with international standards.

Sustained economic growth ensured socially oriented development of the country. The funds allocated from the state budget for the social costs, increased by 16.5 percent, including the costs of social protection and social security - by 33.2 percent.

The average monthly salary increasd by 8.3 percent, reached 357 manat for 11 months. In 2011, the wages in state-funded education, health, culture, youth and sports, science and other fields increased by an average of 10 percent, labor pensions of 900,000 pensioners - an average of 40 percent. The social conditions of refugees and internally displaced persons improved. The level of employment increased. About 94,000 new jobs were created during the year. The unemployment level reduced to 5.4 percent.

The limit of poverty increased by 3 times. It increased from 35.8 manat in 2003 to 106.9 manat in 2011. The poverty level during this period declined from 44.7 percent to 7.6 percent in 2011. Along with the steady increase in the annual poverty level, the number of the poor decreased. The mplementation of measures envisaged by the Action Plan "State program of poverty reduction and sustainable development", covering 2011-2015, will play an important role in further reducing the poverty.

The achievements gained by Azerbaijan in 2011 are appreciated by influential international organizations. When the ratings of some developed countries are falling, the rating agency Standart & Poor `s increased Azerbaijan's long-term independent credit rating by one level "BBB -" "stable" in December last year. Azerbaijan's economy was positively assessed by rating agencies Fitch Ratings and Moody`s. According to the report "Global Competitiveness Index," Azerbaijan's economy in terms of competitiveness ranked 55th among 142 countries and 1st place in the CIS.

The achieved results serve the growth of Azerbaijan's economic potential, improve the lives of citizens of the country. Your strong and well thought-out policy directed to further increase the power of our country, leading it into an even more prosperous future, has created a solid foundation for the comprehensive development of our country in 2012 and subsequent years.

The development concept "Azerbaijan - 2020: A Look into the Future" will consolidate the achievements gained by the country, ensure the planned doubling of the gross domestic product due to non-oil sector for the next 10 years, the achievement of goals to improve the welfare of the people. Azerbaijan will continue to develop and strengthen its own power.