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flag Azerbaijan Azerbaijan: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

Azerbaijan, a country of 8 million inhabitants at located at the crossroads of Europe, Asia and the Middle East, is a major economic player in the Caucasian region due to its great oil and natural gas reserves. It is an economy in transition, where the State continues to play a dominant role. It possessed 0.5% of the world's oil reserves in 2013, as well as a significant agricultural potential. With the help of the IMF, Azerbaijan pursued an economic stabilization program since the end of the 1990s, which led to a GDP growth rate of more than 35% in 2006 and 25% in 2007. Since then, this rate has continued to falter and the international context has led to the end of double-digit growth of the "Emirate of the Caspian," a strategic region between Iran, Russia and Turkey.

Nevertheless the growth rate reached 3.5% in 2013. Macroeconomic perspectives remain good, with a positive surplus of the state budget, a low public debt (11.5% of the GDP in 2013) and a sovereign oil fund, Sofaz, which increased from USD 3 billion in 2007 to USD 34 billion in 2013. The return of growth in 2013 should be confirmed in 2014, but partly thanks to the non oil sector, difficulties in oil production having been slowing down growth in 2013 (-1%).

Inflation has been under control since 2011 (1.5% in 2013). The unemployment rate remains stable around 6% of the active population since 2009 (5.3% in 2013).

The flourishing economic sectors are f oil export, banking, construction and real estate. The country has launched gigantic building programs in order to attract rich tourist in the region. It has recently seen a decrease in the previously high levels of poverty, but the over reliance of its economy on the oil and gas sector remains the key long-term challenge. The problem of corruption still remains unsolved and acts as a real impediment to business development. In 2013, the country was ranked 139th of the 174 countries rated by Transparency International.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 64.8268.7073.54e77.91e85.44
GDP (Constant Prices, Annual % Change) 0.12.25.8e4.54.3
GDP per Capita (USD) 7,1147,4397e8,303e9,033
General Government Gross Debt (in % of GDP) 10.111.6e13.8e15.9e18.0
Inflation Rate (%) 7.91.02.42.83.0
Unemployment Rate (% of the Labor Force) 6.06.06.06.06.0
Current Account (billions USD) 17.1514.9912.5011.35e8.92
Current Account (in % of GDP) 26.521.8e17.014.610.4

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

The agricultural sector contributed to 5.5% of the GDP in 2013 and employs 38.8% of the active population. However, productivity remains low due to the lack of modernization. The main crops are wheat, barley, corn, fruits (wine grapes), potatoes, cotton, silk and tobacco. The share of the GDP in the agricultural sector has been decreasing regularly year on year, in favor of the industry and services sectors. This trend should continue in 2014.

In 2013, the industry sector (except construction) accounted for over 50% of the GDP. The share of industry in the GDP (67% in 2013) has been growing markedly every year. The main industrial sectors of the country are gas, oil and its by-products, steel, iron, chemical and petro-chemical products and lastly, textile.

Currently,  Azerbaijan wants to diversify its economy. The widespread salt springs in the country are progressively turning into flourishing health spa resorts. The old-fashioned craft of carpet weaving is still being practiced with international success and the services are overall increasing their share in the GDP.

Services contribute to 28% of the GDP and employs 48% of the active population.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 37.7 14.3 48.0
Value Added (in % of GDP) 5.7 62.1 32.3
Value Added (Annual % Change) 4.9 1.8 -30.6

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Azerbaijanian New Manat (AZN) - Average Annual Exchange Rate For 1 USD 0.800.800.790.790.78

Source: World Bank - Last Available Data.

 
 

Learn more about Market Analyses about Azerbaijan on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
61.3/100
Position:
Moderately Free
World Rank:
81/178
Regional Rank:
12/25

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
5.26
World Rank:
73/82

Source: The Economist - Business Environment Rankings 2014-2018

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

The Republic of Azerbaijan's foreign trade still depends extensively, in 2014, on the ex-Soviet block countries. Russia and Georgia are among its main partners. However, Italy, the United States, Turkey, Germany, the United Kingdom, Israel, Iran and China are becoming more and more important in the Republic of Azerbaijan's trade relations. A memorandum signed in November 2010 with Iran could develop a cooperation in the energy and transport sectors.  Azerbaijan exports gas to Iran but the share of Iran in this trade with Azerbaijan is still very modest.

Azerbaijan is almost completely dependent on its energy sector. The low level of diversification of the local economy (as evidenced by exports which are 90% comprised of petroleum products), the vulnerability of its external accounts to fluctuations in commodity prices, poor management of resources by the authorities, endemic corruption and a deleterious business climate are still, in 2014, characteristics of emerging countries and oil producers which Azerbaijan is part of.

In 2013, the main clients were Italy, Russia, the United States, Turkey and France, and the main import partners remained Turkey, Russia and Germany. Oil reserves and gas enable the country to have confidence in the coming years but diversification remains a challenge. The main issue in the coming years will be to disentangle the economy from its oil and gas dependency by promoting openness and reducing the power of monopolies.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 6,5146,74610,16710,41711,200
Exports of Goods (million USD) 21,09726,47634,49432,63431,100
Imports of Services (million USD) 3,2973,7625,6307,1058,384
Exports of Services (million USD) 1,6702,0172,6244,1534,551
Imports of Goods and Services (Annual % Change) -5.31.335.62.210.0
Exports of Goods and Services (Annual % Change) 8.124.23.62.21.5
Imports of Goods and Services (in % of GDP) 23.120.724.125.626.9
Exports of Goods and Services (in % of GDP) 51.654.356.453.748.7
Trade Balance (million USD) 14,54519,43424,12821,91420,608
Trade Balance (Including Service) (million USD) 12,97217,99821,33119,29316,419
Foreign Trade (in % of GDP) 74.775.080.579.375.6

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2013
Italy 25.1%
Indonesia 11.6%
Thailand 7.0%
Germany 5.7%
Israel 5.3%
See More Countries 45.4%
Main Suppliers
(% of Imports)
2013
Russia 14.1%
Turkey 13.8%
United Kingdom 12.3%
Germany 7.7%
Ukraine 5.6%
See More Countries 46.6%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 84.7%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 5.1%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 3.1%
Cane or beet sugar and chemically pure sucrose, in...Cane or beet sugar and chemically pure sucrose, in solid form 1.0%
Fresh strawberries, raspberries, blackberries,...Fresh strawberries, raspberries, blackberries, back, white or redcurrants, gooseberries and other edible fruits (excl. nuts, bananas, dates, figs, pineapples, avocadoes, guavas, mangoes, mangosteens, papaws papayas, citrus fruit, grapes, melons, apples, pears, quinces, apricots, cherries, peaches, plums and sloes) 0.4%
See More Products 5.8%
- bn USD of products imported in 2013
Gold, incl. gold plated with platinum, unwrought...Gold, incl. gold plated with platinum, unwrought or not further worked than semi-manufactured or in powder form 8.3%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 5.2%
Powered aircraft e.g. helicopters and aeroplanes;...Powered aircraft e.g. helicopters and aeroplanes; spacecraft, incl. satellites, and suborbital and spacecraft launch vehicles 3.9%
Wheat and meslinWheat and meslin 3.7%
Cigars, cheroots, cigarillos and cigarettes of...Cigars, cheroots, cigarillos and cigarettes of tobacco or of tobacco substitutes 3.1%
See More Products 75.8%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of Economic Development of Azerbaijan
Statistical Office
The State Statistical Committee of the Republic of Azerbaijan
Central Bank
The National Bank of Azerbaijan
Stock Exchange
Baku Stock Exchange
Search Engines
Search AZ
Azerbaijan Internet links
Azerbaijan International
Economic Portals
The Economist : Azerbaijan
Business Information Service for the Newly Independant States

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Political Outline

Executive Power
The President is the chief of the state and is elected by popular vote for a five-year term. He holds the executive powers. The President appoints the Prime minister (who is the head of the government) and the Council of Ministers, who have to be confirmed by the National Assembly.
Legislative Power
The legislature is unicameral in Azerbaijan. The parliament called the National Assembly has 125 seats with its members being elected by popular vote to serve five-year terms. However, the National Assembly has historically been a weak body with little real influence. Azerbaijan has a strong presidential system in which the legislative and judicial branches have only limited independence. The people of Azerbaijan have very limited political rights.
Main Political Parties
The main political parties are: NAP (New Azerbaijan Party), CPA (Communist Party of Azerbaijan), PFP (Popular Front Party), CSP (Civic Solidarity Party), SDP ( Social Democratic Party of Azerbaijan). Opposition parties in Azerbaijan regularly factionalize and form new parties.
Current Political Leaders
President: Ilham ALIYEV (since October 2003, took over from his father) -NAP
Prime Minister: Artur RASIZADE (since November 2003) -NAP
Next Election Dates
Presidential: October 2018
National Assembly: November 2018
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
160/180
Evolution:
4 places down compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Not Free
Political Freedom:
6/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: October 2014