The July 13 opening ceremony of the Baku-Tbilisi-Ceyhan pipeline marked the beginning a new era in the history of Azerbaijan, Georgia, and Turkey. Azerbaijan is already begun to collect dividends from its oil sales, as reflected in a recent public announcement by Azerbaijani officials on economic developments in the first six months of 2006.
Last week, the head of Azerbaijan’s State Statistics Committee, Arif Valiyev, released the country’s economic indicators for January-June 2006. Valiyev stated that Azerbaijan’s GDP has reached $7.81 billion and GDP per capita grew at 34.7% rate. It is up 36.3% compared to the GDP rate for the same period in 2005, reaching 5.248 billion manat (AZN). Azerbaijan’s GDP is forecasted to reach AZN 14.420 billion by the end of 2006 (RIA-Novosti, July 19).
“The budget revenues in the first six months had grown 76.2% year-on-year to 1.292 billion manat ($1.45 billion), with spending rising 52.2% to 1.118 billion manat ($1.23 billion),” noted Valiyev (RIA-Novosti, July 19).
During the same period, the budget surplus accounted for $220 million and the inflation rate remained low at 5.6%. In addition, Valiyev said that Azerbaijan’s exports stood at $2.47 billion, an increase of 2.3 times from last year’s numbers, while imports decreased by 5.8% totaling $1.67 billion. Imports from members of the Commonwealth of Independent States (CIS) rose by 16.4% (Azeri-Press Information Agency, July 18).
Manufacturing led GDP, accounting for 68.6% of the total (AZN 4.901 million); services 29.3% (AZN 1.723 billion); net production and import taxes 7.3% (AZN 521.8 million) (Sharq, July 12).
As of July 1, Azerbaijan’s population reached 8.3 million, of which 47 % (3.9 million) are categorized as working class. Public savings in local banks rose by 36.8% to AZN 581.4 million and the average monthly salary reached 142 manat (about $156), 20.4% up from the last year (Azeri-Press Information Agency, July 18).
Azerbaijan also remained the fastest growing economy among the CIS countries with the highest GDP growth rate of more then 36%, according to separate numbers from the CIS statistics committee (Azernews, July 13).
Also on July 12, the State Privatization Committee of Azerbaijan celebrated the tenth year of privatization activities in the country. The head of the Committee, Kerem Gasanov, noted, “During 10 years of privatization, over 50 regulatory acts have been approved by the government to regulate this process” (Trend, July 12).
Gasanov added, “More than 35,000 small enterprises and facilities have been privatized [during this time]. Over 1,500 large and medium enterprises have been transformed into joint-stock companies [and] while 300,000 people became owners of property, nearly one million people benefited from the privatization” (Trend, July 12).
“Investment tenders for privatization resulted in $230 million investment. Today nearly 80% of GDP falls into the private sector. Since 1996, over 30 ministries, state committees, joint-ventures and companies have been abolished and their facilities made available for privatization,” concluded Gasanov (Trend, July 12).
According to the State Statistics Committee the rapid growth in the country is a result of successful developments in the oil sector. “The Committee concluded that the share of oil sector (both production and refining totaled over the past six months) is 74% of industrial production which grew at a rate of 49.5%, compared to the 1st half-year of 2005” (BakuToday.Net, July 18).
Baku has been trying to develop Azerbaijan’s non-oil sectors with the resources generated by oil revenues. In addition to programs dedicated to the development of regional economies, the government has been actively improving investment conditions in other sectors of the non-oil economy.
Most recently, the Azerbaijani delegation headed by Minister of Communications and Information Technology, Ali Abbasov, toured the United States and invited U.S. firms to Azerbaijan. Non-oil sectors like communications and information technology, agriculture, tourism and banking are seen as potential areas where the Azerbaijani government will invest heavily in attempt to strengthen its non-oil economy and thus avoid the curse of the “Dutch Disease.”