General economic situation

Analysis Materials 6 April 2007 12:01 (UTC +04:00)

In January to February 2007 the GDP grew 41.7% and made up 3,273,1mln AZN at current prices. The growth pace turned out 6.4% less than 2006.

Major factor causing such considerable rise of economic growth pace was the sharp rise in industry. Growth pace of industrial production went up in this period and attained 40.1% and comprised 2,943.8mln manats. Last year the figure was 59.3%.

The drop is explained with 13.4%-cut in production in the state sector, which is linked with the cessation of manufacturing at chemical enterprises due to rise in prices of energy resources (drop in production was by 74.1%). It was linked with the cut in chemical output and electricity, gas and water production (by 1.5%). Along with it, cut in production was observed in industrial production by 3% and in refining industry - 2.1%.

Meanwhile, prediction at the oil refinery plants exceeded the volume fixed January to February 2006 by 50.1% and the share of this sector in industry was 79.9%. The oil production rose 53.1% and made up 6,778mln tons, while gas production - 1,290,1mln cu m with a rise by 20.9%.

Moreover, rise in industrial production was observed in the non-oil sector. 3-fold rise was fixed in the production plastic and rubber wares, machine and equipment (3 times), production of electric, optic and electric equipment, 2.4-fold in non-metallic mineral substances, transport conveyances and equipment (50.3%), 35% in production of wood and wooden wares, 8.3% in foodstuff.

In January to February 2007 growth rate in agrarian industry rose as compared to last year. So, the output increased 4.4% against 3.5% in 2006.

The investments put in major capital rose inconsiderably. A total of 725.1mln AZN was invested in economy at the expense of all sources, which is 13.9% up as compared to 2006 when it was 5.2%. The major reason for rise in investments is growth in demand by the construction of industrial facilities in this sector, where 651.3mln, or 89.8% of all investments was spent.

Thus, growth rate of consumer demand continue stable rising. The turnover of retail good turnover rose 13.9%, while the community services grew 40.4%. The growth rate of commercial services increased, while in the retail goods turnover fell, as it seems on the results of 2006, when the rise comprised 11.7% and 30.5% respectively

Value Added Price In bn manats Special weight, in % Real rise, in %
GDP in total 3273,1 100,0 141,7
production of goods 2422,0 74,0 155,7
including - industry  2143,6  65,5  165,0
- agriculture 66,1 2,0 104,4
- construction 212,3 6,5 103,8
Production of services 617,1 18,9 109,7
Including: - transport  145,1  4,5  111,1
- communications 50,0 1,6 116,5
- trade and repair 194,6 5,9 113,9
- hotels and restaurants 23,9 0,7 125,1
- social and different services 203,5 6,2 102,5
Net taxes on products 234,0 7,1 106,6
Defliator 101,4  

Sources: State Statistics Committee, calculations by Trend

Major part of demand was satisfied at the expense of export, which grew by 44.2% and comprised $779,239mln. The volume of import made up $550,402mln, or 10.7% up as compared to last year. The foreign trade ended in balance with $28,837mln in red.

Major reason for rise in import operations was increase in the amount of import of transport conveyances and spare parts for them, oil gas and hydrocarbons, food products, machines and electric appliances, electro-technical equipment and spare parts.

In January to February 2007, the growth rate of prices on consumer goods and tariffs on services went up by 16.5%. According to the State Statistics Committee, in this period, the price on food products increased by 16.8%, non-food products - 9.8%, whereas tariffs on services rose 23.8%.

The State Committee fixed in January to February 2007 that prices of bakery rose 1.3%, fish products - 2.1%, vegetables - 4.4%, fruits - 9.4%, mineral water, juices, and cool drinks - 0.4%, sugar and confectionery - 0.7%, oils and fats - 1.2%, beer - 0.6%, tobacco - 0.6%, spirits - 0.2%, meat - 0.8%. However, prices of dairy, cheese, and eggs dropped 2.3%.

As a result of January to February net incomes of the population rose 33%, and comprised 1,825.7mln manats. The net incomes dropped 14.4% as compared to last year.

Major tendency at the fiscal market was the consolidation of manat rates with respect to dollar. A tendency on increase of rates, observed over the past period, reflects the real state and is linked with increase of oil revenues in the country.

The NBA forecasts that consolidation of manat will continue because of rise in supply of dollar exceeds demand in the currency market.

The NBA forecasts that consolidation of manat will continue because of rise in supply of dollar exceeds demand in the currency market.

Meanwhile, the National Bank of Azerbaijan (NBA) noted anew tendency on weakening of a long-term nominal amid intensified drop in real exchange rates. From December 2000 to February 2007 inclusively the consumer inflation in the country made up only 51.8% whereas index on major trade partners was 70.9%.

In this period nominal exchange rate of Azerbaijani manat rose 1.8% amid a drop in real exchange rate of manat by 9.6%.

The statistics on inflation mainly includes indices from Iran, Turkey and Russia.