Current Situation of Azerbaijan
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CURRENT SITUATION OF AZERBAIJANGDP growth: The economic condition of Azerbaijan has been on a large roller coaster where the current situation has gone for a dip. There was huge growth rate of GDP that was ever recorded in the world during the year 2006. This growth was 41.7%. As expected this was certainly not sustainable and there has been constant dip in the GDP growth till 2017. In 2017, there is a negative growth of 1.3%.One of the main reasons for the low GDP growth rate is because of the current low energy prices. Since Azerbaijan was depended mostly on oil and natural gas after a sudden market change in oil Azerbaijan had been effected in a bad way. The economic crisis in Russia has also impacted the Azerbaijan GDP growth as Azerbaijan has been the importing partner of Russia. Consumer spending: Whereas the consumer spending of end products or the utility has been on rise constantly in Azerbaijan. Increase in consumer spending can also indicate that the individuals are having higher income and hence the increase in consumer spending. This in turn helps business and governments to determine consumer confidence. Consumer spending has increased by 14% in 2017 from first to second quarter. They had the record high in the second quarter of 2017 of 10789 AZN MillionInvestment Spending: Azerbaijan started privatizing almost 80 % of the total economy way back in 2014. Azerbaijan main focus in 2017 is moving towards transforming it into a global marketplace to attract foreign investment. In the recent times the private and foreign investments have been decreasing if we compare it with public investments. The flows of foreign direct investment (FDI) has been on an increasing curve from few years and has been following the same increasing trend till 2017. The biggest share of FDI is oil and gas sector. However, as a country that remains dependent on oil and gas output for roughly 90%, continued low world oil prices have hit its economy hard. Real GDP contracted 1.3% in 2017 with a 27.6% contraction in construction, one of the most important non-oil sectors of the economy. The private investment was also hard hit by problems in the banking sector and a drop in public confidence.
Government Spending: The government spending in Azerbaijan has been always increasing in this year 2017. From the first quarter of 2017 to the second quarter of 2017, there has been an increase of 10.46 %. Azerbaijan’s Government Expenditure is forecasted to be 25.42 AZN billion in Dec 2017 as reported by International Monetary Fund – World Economic Outlook. It records an increase from the last reported number of 21.37 AZN billion in Dec 2016. Azerbaijan’s Government Expenditure: ytd was reported at 12,783.70 AZN million in Sep 2017. This records an increase from the previous number of 11,327.50 AZN million for Aug 2017.Trade exports: Exports have been quite constant over this whole year 2017. From the first quarter to the second quarter there has been only a slight decrease of 0.013%. State Oil Company of Azerbaijan Republic (SOCAR) has reported that BTC oil export declined by 6.9 % Azerbaijani oil exports through the Baku-Tbilisi-Ceyhan (BTC) pipeline. Azerbaijani oil export and oil output have been dramatically decreased in the first two months of 2017. Russia is one of the strong traders of Azerbaijan which includes food, agricultural raw material, mineral products, metals, vehicles, textiles and chemical products.