Azerbaijan is currently the fastest-growing economy in the CIS, with GDP up by 9.3 percent in the first three quarters of 2001 and by 9.4 percent through October. In 2000 the country achieved 11.4 percent GDP growth, largely because higher oil prices boosted exports, but the rapid growth this year stems from non-oil as well as oil sectors. Agriculture is one significant factor, with output growth rising by 10.4 percent year-on-year through October. Thanks to favorable weather conditions, the country’s grain harvest was up by 31 percent year-on-year in the first ten months of 2001. Tea, vegetable and fruit production also improved considerably.
In contrast, the oil and gas industry grew by 5.6 percent in the first ten months of the year, and overall industrial output was up by 4.7 percent. On a positive note, production reached double digit growth in a number of non-oil sectors–including metallurgy, leather products, machines, and optical and electronic equipment.
Nominal incomes were up by 10.7 percent in the first ten months, and average nominal wages rose by 26.1 percent to reach 237,300 manats (approximately US$50). Inflation rose by just 1.7 percent in the first nine months, helping to boost real wages as well. In the past, increases in income have been focused on a relatively narrow group of the population, particularly those connected with the oil industry. With over 40 percent of Azerbaijan’s population working in agriculture, the rapid growth in agricultural output this year has been especially important in raising the incomes of ordinary citizens. The rise in real incomes has resulted in an impressive 9.6 percent increase in retail sales during the first ten months of the year.
While Azerbaijan’s Caucasus neighbors are having fiscal difficulties, Azerbaijan enjoyed a budget surplus in the first nine months of the year totaling 0.7 percent of GDP. Although revenues were 6.7 percent below the planned level, expenditure was 16 percent lower. Thus far this year, Azerbaijan has repaid US$150 million dollars of its foreign debt, and the level of debt now stands at US$1.1 billion, or just 22.5 percent of GDP. Moreover, the State Oil Fund, which is accumulating proceeds from oil and gas exploration and development for future use, had received US$435.8 million by late October and is expected to receive revenue of US$480 by year’s end (Interfax, December 2; November 18; October 14).
…BUT PROBLEMS REMAIN.