Transcript General Economic Overview of Azerbaijan

General Economic Overview of
Azerbaijan
Vugar Bayramov (Ph.D.),
Chairman of Center for Economic and Social Development (CESD)
www.cesd.az
Content
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Positive tendencies of Azerbaijan Economy
Macro-Economic Figures
Oil Sector Development
Negative tendencies of Azerbaijan Economy
Agriculture
Conclusion
Positive tendencies
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GDP Growth; the world’s highest growth rate for the
second year running
Increasing in foreign and domestic investments
Increasing in State Revenues due to high price of the
world oil market
Gross Domestic Product
GDP Growth, %
40
34,5
30
26,4
25
20
10
10,8
10,2
0
2004
2005
2006
2007
2008
Source; SSC,2009
GDP Per Capita
GDP Per Capita , manat
5000
4440
4000
3473
3000
2508
2000
1000
1060
1600
0
2004
2005
2006
2007
2008
Share of oil and gas sector in GDP
60
60
54
54
50
44
40
30
31
30
31
31
30
20
10
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
Growth in oil and non-oil sector
2004
GDP Growth
10.2
Growth in non-oil Sector , 14.0
2005
2006
2007
2008
26.4
34.5
25
10.8
8.3
12.0
10
15.7
66.3
63.1
51
70
%
Growth in Oil Sector, %
3.0
General Economic Overview
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The medium-term outlook for the economy of Azerbaijan is
positive. GDP growth is expected to continue posting high
double-digit growth over the next few years, mainly from
increased oil and gas production and exports. Foreign
investment is expected to decline over time as the major oil
and gas projects move toward less intensive stages. However,
the Government of Azerbaijan expects increased domestic
public investment to offset some of this decline. Government
expenditure rose by over 80% in 2006 and is projected to rise
by a further 50% in 2007, which puts considerable pressure on
inflation.
General Economic Overview
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In the long term, Azerbaijan’s high dependence on oil exports
poses a potential threat to the economy given the potential
volatility in the international oil market. The main challenge
for Azerbaijan is to develop the non-oil sector to ensure that
the economy continues to grow on a sustainable path after the
oil boom, meeting both short-term expectations and longerterm demands. A key objective is to develop incomegenerating and new employment opportunities in the non-oil
sector, in such priority areas as banking and finance, trade,
and small and medium-sized enterprise (SME) development.
Financial Sector
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Despite tremendous economic development, Azerbaijan's
banking sector is one of the weakest among the sovereigns
rated. The depth of bank intermediation activity is low (system
assets were equivalent to only 17% of GDP as of the end of
2006). The provision of financial services to households and
the private sector is very limited—only an estimated 10% of
the total population has bank accounts, reflecting low
confidence in the banking sector. Financial services have
mainly been provided to the oil, construction, and trade
sectors—leaving the retail and SME sectors notably
underserved.
OIL SECTOR DEVELOPMENT
Contracts
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25 oil contracts with 33 foreign companies from
15 countries have been singed by the
government in order to produce crude-oil in
Azerbaijan. Within these contracts 60 billion USD
is predicted to be invested in the oil sector where
4 billion ton conditional fuel are expected to be
produced.
According to these contracts explore of oil
deposits should be finished during 3-5 years, in
case of finding deposit which has commercial
importance this time can be extended to 25
years. If oil deposits are not discovered then
explore costs is not paid back.
млн. барrел
Oil Production, Forecast
500,0
450,0
400,0
350,0
300,0
250,0
200,0
150,0
100,0
50,0
0,0
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
Source; SSC,2009
GDP Growth, Government Income and Expenditures,
%
200
ÜDM
artımı
190
180
170
160
Dövlət
gəlirlərinin
artımı
150
140
130
Dövlət
xərclərinin
artımı
120
110
100
2000
2001
2002
2003
2004
2005
2006
2007
(proq.)
Source; SSC,2007
STATE BUDGET AND INVESTMENTS
State Budget’s Incomes between 20032010 years(mln.manat)
14000
12564,8
13171,5
12000
Neft gəlirləri
10000
8000
7285,6
6314,9
7469,7
6466,5
7165,6
5984,2
7563,1
6193,4
6000
3868,8
4000
4180,1
2447,8
1610,2 2055,2
1489,6
2000
1481,2
1225,5
542,6
364,1
259
1555,7
1588,2
896,3
0
2003
2004
2005
Büdcə
gəlirləri
2006
2007 (proq) 2008 (proq) 2009 (proq) 2010 (proq)
Dövlətin
gəlirləri,
cəmi
Negative Tendecies
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High Corruption Level
Lack of Transparency
High Bureaucracy Level
High Rate of Shadow Economy
Level of corruption in country
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According to Index of Perception of Corruption of the organization
“Transparency International” for 2007, Azerbaijan is on 124-128 place
(together with other four countries: Angola, Georgia, Cameroon,
Tajikistan) among 133 countries of the world. The poll of thousand of
respondents, carried out recently (May 2004) by national Center of
Sociological Researches “Sorgu”, has also confirmed the high level of
corruption in the country. According to the results of this sociological
poll, more than 86,9% of respondents consider the level of corruption in
the country as rather high (52,2%) or very high (34,7%). High level of
corruption was, practically unanimous opinion of participants of five
focus-groups, carried out in Baku at the end of April – beginning of May
of current year, and those who took part in individual interviews of
experts.
Conclusion
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Azerbaijan has high GDP Growth
State Incomes are rapidly increasing
“Dutch Disease” Risk
CPI (Inflation) is becoming one of main problems
No success on fighting with corruption and enhancing
transparency
Agriculture sector still is undeveloped.
Thank You
Center for Economic and Social Development (CESD)
Shirin Mirzeyev 76 "a"/ 33,
Baku Az1002,
Azerbaijan
Phone: (99412) 495 4248
Fax (99412) 5970691
Email; [email protected]
Web; http://www.cesd.az