GENERAL ECONOMIC SITUATION

In January to June 2005 the GDP grew 5.9% in Azerbaijan as compared to 2004. The GDP grew 16.5% and made up 24.5trln manats at current prices.

Growth pace of industrial production went up in this period and attained 20.1%. The growth was possible at the expense of commencement of the bulk oil production from the Azeri-Chirag-Gunashli fields.

The growth of production in the agrarian sector grew 4.8% in the first quarter of 2005 against 4.6% in 2004.

The investments put in major capital reduced. A total of 12.8trln manats was invested in economy, which is 10.3% up as compared to 2004 when it was 61.3%. The major reason for drop in investments is cut in demand by the oil and gas sector in connection with the completion of major part of construction work in this sector.

Thus, growth pace of consumer demand rose. The turnover of retail good turnover rose 12.2%, while the community services grew 17.1%.

Value Added Price

In bn manats

Special weight, in %

Real rise, in %

GDP in total

24505,1

100,0

116,5

Good production

15353,3

62,7

122,2

Including

Industry

11442,1

46,7

131,9

Agriculture

1056,7

4,3

104,8

Construction

2854,5

11,6

102,1

Production of services

7333,7

29,9

108,8

Including

Transport

1704,1

6,95

108,9

Communications

561,4

2,3

129,9

Trade

2170,7

8,9

112,2

Hotels and restaurants

209,7

0,9

137,6

Social and informal services

2687,8

10,97

101,5

Net taxes on production

1818,1

7,4

106,9

Deflator

108,3


Sources: State Statistics Committee, calculations by Trend

Major part of demand was satisfied at the expense of import, which grew by 37.88% and comprised $2.09bn. The volume of export made up $1.31bn, or 0.16% up as compared to last year. The foreign trade ended in balance with $0.78m in red.

Growth pace of consumer prices fell and made up 13.1% in June. Brake in foodstuff prices tariffs was the key factor for cut in prices.

As of 1 July net incomes of population grew 25.9%, comprising 17.2trln manats.

Net incomes of population grew 6.3%, whereas the growth pace of inflation gained 7.5%.

Despite fall in real incomes from deposits as a result of rapid growth of prices and consolidation of manat in regard to US dollar, savings of physical entities went on growing. As of 1 July 2005, the amount of savings summed up 2.15trln manats and exceeded the similar figure of last year by 39.3%. Growth pace of deposits turned out 24.2% down as compared to January to June of 2004 (62.2%).

In June the major tendency in the financial sector was rise of manat rates in regard to USD - it rose 51.1 points to 4734.10 manats per US dollar. The key reason of rise in manat rates was the aspiration of the monetary authorities not to cause additional inflation at the expense of fulfillment of go and currency reserves.

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