A Mini Course on the Azerbaijani Economy

7/29/2019 A Mini Course on the Azerbaijani Economy

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A Mini-Course on the Azerbaijani EconomyBy Rustam Jamilov


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General Information

Capital: Baku Income Group : Upper-Middle Income

($5290 GNI Per Capita)

Language: Azerbaijani

Territory: 86.6 thousand sq. km.

Population: 9168 mln.

Monetary unit: Manat (AZN)

Exchange rate: 1 AZN = 0.7848 USD

Political System: Unitary constitutional

republic . The power is divided into the

legislative, executive and judicial

branches. The president is the head of the

state.

Borders: Iran (765 km) and Turkey (15 km)

on the south, Russia (390 km) on the

north, Georgia (480 km) on the north-

west and Armenia (1007 km) on the

west.)

Flag Emblem

Did You Know?Azerbaijan was the first Muslim-majority Eastern state to have operas and theater


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Chronology of Globalization

Did You Know?On 1 January 2012, Azerbaijan started a 2-year term as a non-permanent member of the UNSC

2/3/1992 20/12/1993 4/5/1994 22/04/1996 25/1/2001 1/9/2002

Azerbaijan signs

Partnership for

Peace

Programme of

NATO

Azerbaijan

joins United

Nations

Azerbaijan

joins OSCE

Azerbaijan

becomes 43rd

member stateof the Coincil

of Europe

Azerbaijan

participates

in the UN's

Millenium

Project

Azerbaijan

signs P&C

Agreement

with the EU


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The Growth Record

Over the past 10 years:GDP grew 8-fold

and nation-wide

average wages grew

5-fold

Poverty rate fell from45% to less than

8%, while extreme

poverty is

eliminated

GNI per capita of $5290in 2011 placed

Azerbaijan into the

WBs Upper-Middle

Income group of

countries

0

5

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20

25

30

35

40

45

50

0

100

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

PercentofPopulation,%

AccumulatedGrowthRateIn

dex,2002=100

GDP (Left) Average Wage (Left) Poverty Rate (Right)

Did You Know?Azerbaijan accounts for over 75% of South Caucasus total GDP


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Oil-Driven Rise

0

10000

20000

30000

40000

50000

60000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Thousand,AZN

Non-oil Sector Only Oil Sector Only

Starting from 2006, oilcontract sales began

to generate

revenues

Azerbaijans total oil

reserves rank 21st inthe world at 7

billion barrels

The non-oil sector has

been growing

equally vibrantly inthe past 5 years

Did You Know?The Baku-Tbilisi Ceyhan Oil Pipeline is the second longest in the world


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Investment Dynamics

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

-100%

-50%

0%

50%

100%

150%

200%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Million,AZN

PercentofNon-OilInvestments,%

Internal (Right) Foreign (Right) Corporate (Left) Government (Left)

In recent years,investments

directed at the non-

oil sector have been

financed both by

state and private

sector agents

The role of domestically

originated

investment is

growing

Azerbaijan continues to

be an attractive

target for foreign

investors as

inflowing capital is

growing

Did You Know?Azerbaijans capital city Baku is in the worlds Top 10 destinations for urban life


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Monetary Policy

Inflation has droppedfrom the pre-crisis

highs to single-digitlevels in past 4

years

A healthy money

demand mandateda considerable

monetary expansionfrom the Central

Bank

Manats market value

almost doubledsince 2004,

signaling an inflowof foreign capital

and a strongdomestic currency

0

2000

4000

6000

8000

10000

12000

14000

50.0

60.0

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Million,AZN

Index

Reserve Money (Right) CPI (Annual Average, Left) REER (2000=100, Left)

Did You Know?Azerbaijan hosted the 2012 Eurovision Song Contest and will host the 2015 European Games


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Fiscal Spending

Interest payment isremarkably low;

Azerbaijan is

fundamentally debt-free

More than 20% of the budget

is spent on pension,

unemploy-ment, and

public aid support

packages

Fixed capital formation is the

chief focus of fiscal

authorities, transmittingoil-generated wealth into

the real economy

Robust budget surplus makes

Azerbaijan independent

of foreign borrowing

0

5000

10000

15000

20000

25000

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35000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Million,AZ

N

Public Wages Goods & Services Interest Payment Social Expenditures

Transfers Fixed Investment Budget Surplus

Did You Know?90% of total exports between the European Union and South Caucasus belongs to Azerbaijan


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Strategic Buffer

State Oil Fund of

Azerbaijan hasaccumulated $30+billion in reserved

assets

Central Bank ofAzerbaijan holds $10+

in strategic foreignreserves

Savings by the populationincreased 4-fold inthe past five years

Azerbaijan is wellprotected against any

externalmacroeconomic

shocks

0

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3500

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4500

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25000

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35000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Million,AZN

Million,AZN

SOFAZ Assets (Left) CBAR Foreign Assets (Left) National Saving (Right)

Did You Know?The State Oil Company of Azerbaijan (SOCAR) is one of the largest companies in the world,

with $21 bln. in capital


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Current Account Balance

Domestic demand for

foreign goods and

services is steadily

growing

Oil-led exportation

strongly integrates

Azerbaijan with theglobal economy

Current account balance

serves as a solvency

buffer against

macroeconomicturbulences

-5000

0

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15000

20000

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-10000

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Million,AZN

Million,USD

Total Exports (Left) Total Imports (Left) Current Account Balance (Right)

Did You Know?90% of total exports between the European Union and South Caucasus belongs to Azerbaijan


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Bank Sector Growth

Domestic bank sector has

grown 10-fold in 8

years in terms of total

assets held

Banks are more efficient

and profitable, having

generated up to 14-times more income in

2012 than in 2004

The importance of the

financial sector is

growing; bank sectorratio to national GDP

doubled in recent

years0

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2004 2005 2006 2007 2008 2009 2010 2011 2012

Percent,%

CumulativeGrowth

,2004=100

Banking System Assets Banking Sector Income Banking Sector Assets/GDP

Did You Know?Azerbaijan launched its first space satellite AzerSat 1 into orbit in Summer, 2012


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Global Competitiveness Rank, 2012

Did You Know?Azerbaijans Global Competitiveness Rank is highest among all CIS states


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Doing Business Rank, 2012

Did You Know?Azerbaijan was recognized as Top Reformer by the World Banks Doing Business 2009 report


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EBRD Transition IndicatorsLarge scale privatisation

Small scale privatisation

Governance and enterprise

restructuring

Price liberalisation

Trade & Forex system

Competition Policy

AzerbaijanBelarus

Georgia

Kazakhstan

Russia

Did You Know?Gobustan Rock Art Cultural Landscape and Walled City of Baku (With Shirvanshahs Palaceand Maiden Tower) are included into the UNESCO World Heritage with 10 more on a tentative list


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Summary

Azerbaijan is an upper middle income oil-rich

state in transition to an efficiency-drivendevelopment, with a stable macroeconomicbalance, fiscal and trade surpluses, positiveinvestment climate, and vibrant financial sector

Development of the non-oil economy continuesto be strategic national priority

By 2020, Azerbaijan aspires to reach the status ofan emerging European-level economy with

$12,000 GNI per capita, high financialpenetration, innovation-friendly climate,intensive manufacturing and exportation, andlucrative touristic hospitalities

A Mini Course on the Azerbaijani Economy

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