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
10
15
20
25
30
35
40
45
50
0
100
200
300
400
500
600
700
800
900
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
70.0
80.0
90.0
100.0
110.0
120.0
130.0
140.0
150.0
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
30000
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
500
1000
1500
2000
2500
3000
3500
4000
4500
0
5000
10000
15000
20000
25000
30000
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
5000
10000
15000
20000
-20000
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
30000
35000
40000
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
5
10
15
20
25
30
35
40
0
200
400
600
800
1000
1200
1400
1600
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
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