Economy of Azerbaijan

Main article: Azerbaijan

GDP

2022: 4.6% GDP growth

in GDP Azerbaijan 2022 increased by 4.6% compared to 2021. This is evidenced by the data of the State Statistics Committee of the republic, which were published in January 2023.

In absolute terms, the gross domestic product of Azerbaijan in 2022 increased by 133.8 billion manats. In the oil and gas sector of the economy, value added decreased by 2.7%, while in the non-oil sector it increased by 9.1%.

In the structure of GDP, 51.1% fell on industry, 8.2% - trade, repair of vehicles, 6.0% - transport and warehousing, 4.8% - construction, 4.8% - agriculture, forestry and fishing, 1.4% - information and communications, 1.6% - to the share of accommodation tourists and the catering sector, 14.7% - to other areas.

Earlier in January 2023, Azerbaijani President Ilham Aliyev said that in 2022 the country's GDP reached a record 134 billion manats (about $80 billion). According to him, the country's foreign trade turnover exceeded $50 billion, while the positive balance of foreign trade (excess of export volumes over imports) amounted to $25 billion. The republic's external debt in 2022 decreased from 17% to 9.5% of GDP, to $7 billion.

Aliyev stressed that such results indicate the economic independence of the country. In his opinion, the country is able to attract unlimited foreign loans, if such a need arises, but so far it is not.

The Government of Azerbaijan for 2022 predicted GDP growth at 3.5%, nominal volume - up to 130 billion manats. GDP per capita in 2022 was 13,292,2 manata.

The mass arrival of Russians in post-Soviet countries had a positive impact on the economies of host states in 2022. This partly helped the economy of Azerbaijan.^[1]

2021: GDP growth of 5.6%

In 2021, the volume of gross domestic product (GDP) in Azerbaijan in real prices amounted to 92.86 billion manats, which is more than 20 billion manats or 28.2% more than in 2020. However, GDP growth turned out to be much more modest in comparable prices - 5.6%, according to the data of the State Committee of Statistics of Azerbaijan, published in mid-January 2022.

In the structure of GDP, industry accounted for 42.5%, trade and repair of vehicles - 10.1%, transport and warehousing - 6.9%, construction - 5.9%, agriculture and forestry, fish farming - 5.9%, the information and communications sector - 1.8%, to the sphere of accommodation of tourists and catering facilities - 1.3%, to other sectors - 17.2%.

The share of taxes in GDP was 8.4%. GDP per capita in 2021 amounted to 9 thousand 269.3 manats.

In 2021, tax revenues in Azerbaijan increased by 15.5%, amounting to 8.5 billion manats. The forecast was fulfilled by 117.7%. Receipts from the non-oil sector reached 6.4 billion manats, which is 13.5% more than in 2020 and 12.2% higher than forecast, Azerbaijani Economy Minister Mikail Jabbarov wrote on his Twitter account.

According to him, in 2021, receipts on contributions to compulsory state social insurance in Azerbaijan increased by 8% compared to 2020 and exceeded 3.8 billion manats. Thus, the forecast was fulfilled by 109.9%.

Dzhabbarov noted that, although in 2020 the country's GDP decreased due to the COVID-19 coronavirus pandemic, in 2021 this figure not only recovered, but also exceeded the 2019 figure.

According to the State Committee for Statistics of Azerbaijan, the nominal volume of industrial production in the country in 2021 amounted to 54.5 billion manats, real growth - 5.2%. The increase in the non-oil and gas sector was 18.9%.^[2]

2016: GDP $17.2 thousand per person

Financial system

Inflation

2022: Inflation in November - 13.7%

Currency: manat

2015: Manat devaluation by 33% in 1 day

On Saturday morning, February 21, 2015, Azerbaijani officials said that the manat is stable, we control the process. They reminded of the gold and foreign exchange reserves of Azerbaijan - about $50 billion, commensurate with GDP. However, already in the middle of the day, a message from the Central Bank of Azerbaijan about the new course came: now $1 was sold for 1.05 manat, devaluation - by 33.5%. Prices for cars and electronics immediately rose. The price tags in grocery supermarkets have not changed, apparently by agreement with the authorities.

"At the first moment, of course, we panicked," says Rauf from Baku. What if it falls further? But two days later, the president spoke on TV and said that the course has changed, but that's it. "

Unlike Russia, only the state trades in oil and gas in Azerbaijan. The manat course depends entirely on the decision of the authorities. Why, as oil prices fell, did the authorities spend gold and foreign exchange reserves to maintain manat? There are many versions. The most real: in countries such as Azerbaijan, Kazakhstan (where tenge was devalued by 20% per day a year ago), their ideas about stability. Azerbaijan was waiting for the moment when it would be possible to adjust the course immediately and for a long time. What is this moment? Stabilization of the Russian ruble exchange rate.

The fact that the cheaper ruble is becoming a serious problem was told to me by the tomato producer and the hotel manager in Naftalan: Russia is in fourth place among importers of Azerbaijani products, but apparently in the first non-oil sector. Entire areas focused on growing vegetables and fruits for Russia were wary of the new season: with a cheap ruble, everything could rot in the fields. "Of course, our cost of roses will increase - fertilizers, for example, imported ones," Rashid Aliyev commented on the devaluation of the manat. "On the other hand, it will be easier for us to compete with imported colors." The rest of Russia's neighbors simultaneously or gradually, but have already devalued their currencies, adjusting them against the ruble, Azerbaijan simply remained the last to not do so. And after the devaluation, the loss of manual control, which passed from Father Ilham Aliyev, does not seem to threaten the country.

2005: Introduction of a new 1-to-1-dollar manat

After the introduction of a new manat in Azerbaijan in 2005, its exchange rate was equated to the US dollar. As oil prices rose, the manat rate grew. Starting from 2011 and February 2015, 0.78 manat was given for $1. This, of course, was an anomaly against the general background: in 2014, the Russian ruble against the dollar almost halved, and all other currencies of the post-Soviet countries - from 6% to 50%.

Key rate

Remittances of individuals

2022: The rise of money transfers from Russia 5 times in the 1st half of the year

80% of all transfers from individuals to Azerbaijan came from Russia. In the first half of 2022, out of $1.6 billion, Russians transferred $1.2 billion, which is five times more than in the same period last year. The growth occurred against the background of Russia's military special operation in Ukraine and a strong depreciation of the dollar against the Russian ruble.

Electronic Payment Systems

• Electronic payment systems in Azerbaijan

Mining

Gas export

• TANAP Trans-Anatolian gas pipeline

2024: Gas exports to 8 European countries

In August 2024, Azerbaijan is negotiating to expand natural gas exports to at least three more European countries. The country already supplies gas to 8 European countries and has an agreement with this region to double exports by 2027.

For Italy, Azerbaijan has become the main supplier of oil and the second exporter of gas. For Baku, Italians are one of the main trading partners: trade between the countries reaches $16 billion.

2022: Gas Exports by Pipeline

2015: Gas production growth

At the beginning of 2015, oil reserves are estimated at 2 billion tons, gas - at 2.65 trillion cubic meters. m. Gas production in 2014 (almost all in deep-sea fields) - 29 billion cubic meters. m. Gas is used mainly for its own needs, 9 billion cubic meters are exported. m. Oil exports - 35-36 million tons per year^[3].

"As we move to deeper horizons, the share of gas increases," said Minister power engineering specialists Azerbaijan Natig Aliyev. "Today, our task is to maintain the level of oil production, increasing gas production. We expect an additional 16 billion cubic meters. m per year, for which the southern gas corridor is built. All this production has already been contracted: 6 billion cubic meters. m beret Turkey, 10 billion -. " Europe

According to the contract, 30% of the products went to Azerbaijan, 70% to investors. However, as the initial investments returned, the proportion changed: in 2006 they reached 80/20, and in 2015 it was already 90/10. However, the contract signed for 30 years will certainly be extended after this period.

Oil production

• SOCAR - SOCAR - State Oil Company of the Republic of Azerbaijan

2023: Azerbaijan provides about 40% of Israel's oil needs in exchange for weapons

As of November 2022, Azerbaijan provides about 40% of Israel's oil needs. In exchange, Azerbaijan receives billions of dollars in modern weapons from Israel.

According to the Stockholm International Peace Institute (SIPRI), Israel at that time supplies almost 70% of modern weapons to Azerbaijan. Azerbaijan's interests are also defended by pro-Israel lobbying groups in Washington.

2021

For 2020, Azerbaijan is the second largest oil producer in the Caspian Sea region. The country exports a large share of its oil through the Baku-Tbilisi-Ceyhan pipeline to the export oil export terminal in Turkey.

1994: Contract with 13 oil companies led by BP

By the 1990s, old oil fields were noticeably depleted. In a record 1941, 23 million tons of oil were produced in Azerbaijan, and in 1993 - only 9 million tons.

The main reserves of Azerbaijan were concentrated in deep-sea fields: in Soviet times they were only explored.

"There

were no technologies, the necessary production facilities for the construction of the platforms themselves, underwater pipelines," Minister power engineering specialists Azerbaijan Natig Aliyev told Dengam in an interview. "But most importantly state , there was not a cent in the treasury. We then believed that the launch of the first stage requires from $7.5 billion. Who will give such money to a country that has a military conflict, internal instability? So Heydar Alievich personally met with investors, convinced that everything would be calm in Azerbaijan, guaranteed the protection of capital. "

According to the contract of September 20, 1994, 13 oil companies began to develop three deep-sea fields with their own funds, receiving in return participation in the production sharing. The development operator is BP as a participant with the maximum share. Unlike Russia, there was no privatization of the oil industry in Azerbaijan: only the State Oil Company of the Republic of Azerbaijan (SOCAR, better known in the Latin version of SOCAR) is producing at 56 old fields (35 onshore and 19 offshore) and BP on two new offshore ones.

"What is the distribution between them? A good question! - notes Natig Aliyev. "In 2014, we produced 43.3 million tons of oil: 35 million from two new deep-sea fields, 8 million from all the others combined." After that, it is clear why the Day of the Oilman in Azerbaijan is now celebrated on September 20. And in general, from the date of signing the "contract of the century," the new history of the country is counted

.

1890

Gold, silver, copper, molybdenum, zinc

The British Anglo-Asian Mining plays an important role in mining in Azerbaijan. For more on the company, see Mohammad Reza Waziri

Energy carriers

Gasoline price

Power

Black Sea Energy - Agreement on the export of electricity to the EU along the bottom of the Black Sea

• Black Sea Energy - a project of an underwater cable along the bottom of the Black Sea for the transmission of electricity from Azerbaijan.

2020: Low per capita energy consumption

and

Transport infrastructure

Azerbaijan Railways

Main article: Azerbaijan Railways

Middle corridor

Main article: Middle Corridor (Trans-Caspian International Transport Route)

Zangezur corridor

Main article: Zangezur corridor

North-South Corridor

In October 2022, Russia proposed to Azerbaijan and Iran to create a single logistics operator on the North-South international transport corridor according to the model of the existing OTLK ERA, which is owned on a parity basis by the railways of Russia, Kazakhstan and Belarus.

However, unlike the OTLK ERA route, the railway in the new direction is not developed enough, it is not even continuous. The development of routes is much more active in the message Russia - Azerbaijan than through the border of Azerbaijan with Iran, where the cargo flow does not exceed 500 thousand tons.

R&D

2020: R&D expenses - $352 million

ICT market

• Azerbaijan IT market
• Communication (Azerbaijan market)
• Digital economy of Azerbaijan

Foreign trade

2024: Chinese imports surge

Total exports China to, and Armenia Azerbaijan Georgia reached $1.1 billion in the first quarter of 2024 compared to $0.4 billion in the first quarter of 2019. This 150% growth is clearly not to meet any boom in domestic demand in the Caucasus. All these goods are sent to, Russia said chief economist IMF Robin Brooks in May 2024.

2023

Trade with Russia grew by 17.5% over the year and reached $4.3 billion

Trade turnover between Azerbaijan and Russia in 2023 increased by 17.5%, reaching $4.3 billion. This is evidenced by the data of the State Customs Committee of Azerbaijan, which TAdviser got acquainted with at the end of August 2024.

According to the committee, in 2023, the export of Azerbaijani products to Russia amounted to $1.196 billion, which is 22.7% more compared to 2022. Imports of Russian goods to Azerbaijan also showed growth, increasing by 15.6% and reaching $3.162 billion. Thus, Russia consolidated its third place among the largest trading partners of Azerbaijan, second only to Italy and Turkey. Trade with Russia amounted to 8.52% of the total foreign trade turnover of the republic.

Baku, Azerbaijan

According to TASS, the growth in trade is largely due to the implementation of large joint projects. Over the past three years, the volume of trade operations between Azerbaijan and Russia has doubled, which has become possible thanks to active industrial cooperation. For example, the opening of the Azermash JSC plant in the Gadzhigabul industrial quarter made it possible to establish the production of GAZ Group cars, and the Russian company Abrau-Durso successfully expanded its presence in the Azerbaijani market by launching wine production.

Investment projects also made a significant contribution to the growth of trade. In 2023, Russian companies invested about $295 million in the Azerbaijani economy, which significantly exceeded the previous years. In turn, Azerbaijani investments in Russia reached $33.3 million. This indicates the expansion of mutually beneficial cooperation between the two countries.

Cooperation in engineering and pharmaceutical spheres plays an important role in strengthening trade and economic ties. In particular, the Russian company R-Pharm has completed the construction of a plant for the production of drugs for the treatment of diabetes, and is also working to localize the production of insulins in Azerbaijan. These projects not only contribute to the growth of trade, but also create new jobs, which is of social importance for both countries.^[4]

Rising imports from Turkey and China

Unemployment

2020: Unemployment rate - 6.5%

Incomes of the population

2023: Minimum wage - $186

Tourism

2022:80% increase in tourist flow from Russia

The tourist flow from Russia Azerbaijan to in 2022 increased by about 80%, Azerbaijan President Ilham Aliyev said in November 2022.

2019: How much Azerbaijan depends on tourism:% of the industry in GDP

2018

Economic history

2006: Diversification

"We can talk about the Azerbaijani development model," Deputy Minister of Economy and Industry of Azerbaijan Niazi Safarov said in an interview with Money in early 2015. Today, the share of the non-oil sector of GDP is 59%, according to the development concept, by 2020 this figure will rise to 80%. Over the past ten years, $160 billion has been invested in the country's economy, of which $105 billion has been invested in the non-oil sector. More than 500 new industrial enterprises have been created in the districts, of which 240 in 2014 alone. "

We went to the other end of Azerbaijan, to the Shamkir region, to see new enterprises. Since Soviet times, it has been considered agrarian. Actually, in 2015, when you drive along the highway, the greenhouses completely overloaded with polyethylene are around. Samir, the owner of one of these plantations of 2.5 hectares, says that local production has always focused on deliveries to Russia and now up to 90% are sent to the Russian Federation. Carnations were grown 10-15 years ago, but now they are sold poorly in Russia. Switched to tomatoes, cucumbers, salad. Samir has modern drip irrigation under nondescript polyethylene. Long rows of bushes - like a ruler. They remove three crops a year. Delivered to Moscow and St. Petersburg, from there is already being transported around the country. Samir claims that his tomatoes fall into both Auchan and Pyaterochka.

"Yes, this year we hope to sell more than in the past," Samir nods in response to my assumption about the benefits for Azerbaijani business of the Russian embargo on European products. Azerbaijanis historically have not only a vegetable business in Russia, but also a flower business. However, both vegetables and flowers for Russia have long been purchased mainly To Europe in. But in Azerbaijan it is not colder, and it is convenient to deliver to Moscow. The question is the introduction of new technologies that would allow us to compete with Europe. Director of the flower farm Azagro (trademark S. Buket) Rashid Aliyev clearly does not look like a collective farmer: a young man in an elegant blue suit. It takes us to a greenhouse where roses grow in mineral wool: Dutch technology. The equipment is imported, the staff studied in. Holland Even packaging is purchased in Europe. At the same time, the cost due to the climate is lower than in Holland. The company was launched in the fall of 2012. So far, the volumes have been completely eaten up by domestic consumption, but now they have increased: after March 8, according to Rashid, these flowers will begin to be supplied to Moscow. Asked how much was invested, who is the main shareholder, Rashid said with a smile that investments are only domestic, including soft government loans.

A quote from the current President of Azerbaijan Ilham Aliyev is displayed on the wall at the entrance to the Zeyam Tehnopark metal structures workshop. Translated: "We have chosen the right direction - development in the field of industrial production." The workshop opened a few months ago, while metal structures are being produced here, mainly for modern greenhouse complexes - the same flower farms. However, according to director Agil Asarov, the next phase of production will be boilers, generators, apparently, again for the needs of local agriculture. Agil Asarov was invited from Turkey, led the same production there. Actually, all the other enterprises that we looked at in the Shamkir region differed from each other only in the field of activity. The rest is like a carbon copy. The director is a young man in an expensive suit, knows foreign languages, studied or trained in the USA or Great Britain. On the wall are the mandatory words of the president, corresponding to the field of activity. For example, at the bakery, launched in November 2014, the quote: "Social orientation is the main principle of our economy," and the technologist is Dutch, he used to work in Poland, Saudi Arabia.

Sumgait, located near Baku, has been the center of the Azerbaijani petrochemical industry since the 1950s. Today, the Sumgait chemical industry is run by Azerichimia, a SOCAR division. The head of the Azerikhimia design bureau, Rza Rzaev, demonstrates polyethylene production plants: 95% is exported.

Unlike Azerichimia, the Sumgait Technology Park (STP) is built at the expense of private investors. 13 factories have been erected from scratch on a giant territory - this is 3 thousand workplaces. Here, under its own brand STP, payment terminals, monitors, various sensors, controllers are produced. I am proudly shown the high-voltage cable factory. Previously, BP imported the cable, and today it buys Sumgait products not only for Azerbaijani projects, but also for divisions in other countries. The most interesting thing is the precision mechanics plant. "The equipment that stands here can be compared with 3D printers of micron accuracy: on these machines you can make any parts for any equipment," says Jamil Gasymov, head of the STP business development department. Now parts are being made for oil and gas equipment.

Old-timers recall that, while still the first secretary of the Central Committee of the AzSSR, Heydar Aliyev spoke about diversification - the development of agriculture. In particular, about the transformation of viticulture and winemaking into the second most important industry after oil. The industry developed before the famous Gorbachev anti-alcohol campaign - most of the vineyards were cut down in Azerbaijan. Today, winemaking is only being revived. According to Alesker, director of the St. George winery, installed here under the tsar, the oldest laying of cognac alcohol was made by them only seven years ago. In the meantime, he demonstrates a new line for bottling vodka: it is more popular in Azerbaijan than cognac.

In one of the conversations with local officials, it was said that the main idea of ​ ​ the revival of Azerbaijan is to create everything again using modern technologies. This is most clearly seen in the tourism sector: they immediately invited foreign managers with foreign teams of service personnel, from cooks to waiters. At the luxury Excelsior Hotel in Shamkir, part of the team are Filipinos who previously worked in Dubai and Saudi Arabia. Basically, foreign specialists in Azerbaijan are from Turkey. Languages ​ ​ are close, but the task of foreigners is not only to put business at the initial stage, but also to train local ones, Timur Choshkun, one of the Turkish expats, manager of the Azerbaijani holding Synergy Group in Shamkir, explains to me.

The average salary in Azerbaijan (before devaluation) is about $600. In Kazakhstan, for example, it is somewhat higher, but there I met many janitors and builders from Uzbekistan and Kyrgyzstan. There are no guest workers in Azerbaijan: as I understand it, the arrival of only highly qualified specialists is welcome.

"Chinar" in Naftalan is now called not a sanatorium, but a hotel. In fact, this is precisely a sanatorium: they are treated with famous oil baths. The head physician Khurshad Namazalieva meets us in a white robe draped over our shoulders, as was customary in old Soviet sanatoriums. This analogies with the past end: a full-fledged resort hotel, as in Turkey. "Naftalan as a resort began in the 1930s, since the 1950s - as an all-Union health resort," says Namazalieva. "We have no problems with the medical component of the sanatorium, but there is not enough experience in organizing hotel service, business manager and managers in directions - from Turkey." Almost everywhere in Azerbaijan, inscriptions are duplicated only in English, and here in Russian: a noticeable proportion of patients are from Russia or the former USSR. "Chinar" - state, was closed in 1991 and opened after reconstruction in 2011. The rest of the sanatoriums of Naftalan (there are a dozen of them) do not work: for 20 years refugees from Karabakh lived in them, only recently they were resettled in specially built microdistricts. Here I received an answer to the question why most of the objects I saw were built recently: the first years of the oil rise, the country solved the problems of 1.2 million refugees. In total, there are about 9 million inhabitants in Azerbaijan.

AzSSR

In the USSR there were only two republics, invariably donor, - the RSFSR and the AzSSR. "Soviet Azerbaijan is walking wide!" - noted once after visiting the republic Brezhnev.

Alcohol market

Minimum age to purchase alcoholic beverages

Agriculture

2019: Low use of pesticides in agriculture

Consumption

Meat

2023: Poultry meat is the most consumed type of meat

Notes