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The Economy of Azerbaijan

Azerbaijani Economy

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Economy - overview: Azerbaijan's high economic growth during 2006-08 is attributable to large and growing oil exports, but the non-energy sector also featured double-digit growth in 2008, spurred by growth in the construction, banking, and real estate sectors. However, the current global economic slowdown presents some challenges for the Azerbaijani economy as oil prices have plummeted since mid-2008 and local banks face a more uncertain international financial environment. Azerbaijan's oil production declined through 1997, but has registered an increase every year since. Negotiation of production-sharing arrangements (PSAs) with foreign firms, which have committed $60 billion to long-term oilfield development, should generate the funds needed to spur future industrial development. Oil production under the first of these PSAs, with the Azerbaijan International Operating Company, began in November 1997. A consortium of Western oil companies built a $4 billion pipeline from Baku to Turkey's Mediterranean port of Ceyhan which will pump 1.2 million barrels a day from a large offshore field when at full capacity. Azerbaijan shares all the formidable problems of the former Soviet republics in making the transition from a command to a market economy, but its considerable energy resources brighten its medium-term prospects. Baku has only recently begun making progress on economic reform, and old economic ties and structures are slowly being replaced. Several other obstacles impede Azerbaijan's economic progress: the need for stepped up foreign investment in the non-energy sector, the continuing conflict with Armenia over the Nagorno-Karabakh region, pervasive corruption, and potential for a sharp downturn in the construction and real estate sectors. Trade with Russia and the other former Soviet republics is declining in importance, while trade is building with Turkey and the nations of Europe. Long-term prospects will depend on world oil prices, the location of new oil and gas pipelines in the region, and Azerbaijan's ability to manage its energy wealth to promote sustainable growth in non-energy sectors of the economy and spur employment.

GDP:

GDP - real growth rate: 11.6% (2008 est.) 23.4% (2007 est.) 30.5% (2006 est.)

GDP - per capita:

GDP - composition by sector: agriculture: 6% industry: 62.6% services: 31.4% (2008 est.)

Population below poverty line:

Household income or consumption by percentage share: lowest 10%: 3.1% highest 10%: 29.5% (2001)

Distribution of family income - Gini index: 36.5 (2001)

Inflation rate (consumer prices):

Labor force: 5.782 million (2008 est.)

Labor force - by occupation: agriculture: 39.3% industry: 12.1% services: 48.6% (2005)

Unemployment rate: 0.8% official rate (2008 est.)

Budget: revenues: $14.51 billion expenditures: $15.66 billion (2008 est.)

Industries: petroleum and natural gas, petroleum products, oilfield equipment; steel, iron ore; cement; chemicals and petrochemicals; textiles

Industrial production growth rate: 12% (2008 est.)

Electricity - production: 23.8 billion kWh (2007 est.)

Electricity - production by source:

Electricity - consumption: 27.5 billion kWh (2007 est.)

Electricity - exports: 800 million kWh (2007 est.)

Electricity - imports: 500 million kWh (2007 est.)

Oil - production: 1.099 million bbl/day (2008 est.)

Oil - consumption: 160,000 bbl/day (2007 est.)

Oil - exports: 795,600 bbl/day (2007 est.)

Oil - imports: 4,267 bbl/day (2005)

Oil - proved reserves: 7 billion bbl (1 January 2008 est.)

Natural gas - production: 9.77 billion cu m (2007 est.)

Natural gas - consumption: 9.77 billion cu m (2007 est.)

Natural gas - exports: 0 cu m (2007 est.)

Natural gas - imports: 0 cu m (2005)

Natural gas - proved reserves: 849.5 billion cu m (1 January 2008 est.)

Agriculture - products: cotton, grain, rice, grapes, fruit, vegetables, tea, tobacco; cattle, pigs, sheep, goats

Exports: $38.28 billion f.o.b. (2008 est.)

Exports - commodities: oil and gas 90%, machinery, cotton, foodstuffs

Exports - partners: Turkey 17.4%, Italy 15.5%, Russia 8.7%, Iran 7.2%, Indonesia 6.4%, Israel 6.1%, Georgia 5.7%, US 4.8%, France 4.3% (2007)

Imports: $7.496 billion f.o.b. (2008 est.)

Imports - commodities: machinery and equipment, oil products, foodstuffs, metals, chemicals

Imports - partners: Russia 17.6%, Turkey 10.9%, Germany 8.2%, Ukraine 8.2%, UK 7.2%, Japan 5.2%, China 4.9%, US 4.7% (2007)

Debt - external: $2.733 billion (31 December 2008 est.)

Economic aid - recipient:

Currency:

Currency code:

Exchange rates: Azerbaijani manats (AZN) per US dollar - 0.8219 (2008 est.), 0.8581 (2007), 0.8934 (2006), 4,727.1 (2005), 4,913.48 (2004) note: on 1 January 2006 Azerbaijan revalued its currency, with 5,000 old manats equal to 1 new manat

Fiscal year: