Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Azerbaijan’s GDP totaled $54.62 billion in 2021, an increase of 5.6 percent from 2020. During this period, the country’s non-oil GDP increased by 7.1% and oil GDP increased by 1.8%. In 2021, 37.8% of Azerbaijan’s GDP came from energy, 10.1% from international trade, 5.9% from agriculture, forestry and fishing, 6.9% from transportation, 5.9% from construction, 1.8% from information and communication, and 1.3% from tourism. In 2021, Azerbaijan reported a foreign trade decrease of 26% of $24.4 billion. At the same time, the country also reported an overall increase in total net exports, with exports increasing by 60% year-on-year to $22.20 billion, and imports increasing by 9% to $11.70 billion. Top imports are iron and steel, machinery, vehicles, and food products (mostly meat and dairy). The trade turnover between the United States and Azerbaijan was $518 million 2021, a 21% decrease year-on-year. Azerbaijan’s top export destinations in 2021 were Italy, Turkey, Russia, and China.
Azerbaijan’s economy is anchored in oil and gas production, which accounted for roughly 40% of the country’s GDP and over 80% of export revenue in 2021. In January 2021, the Southern Gas Corridor (SGC) pipeline became fully operational, delivering Azeri gas to Turkey and onwards to European markets. Azerbaijan has significant wind and solar potential, and the Azerbaijani government is working to expand its renewables sector. By 2030, Azerbaijan plans to install 1500 MW in renewables capacity, in part to support future export of green electricity and green hydrogen to European markets.
Currently, work is underway to restore Azerbaijan’s newly recovered territories. In 2021 the government allocated $1.5 billion for reconstruction works, including restoration of damaged infrastructure (electricity, gas, water, communications, roads, education, health, etc.), as well as cultural and historical monuments.
Azerbaijan continues to promote diversification of its economy away from hydrocarbons, and is looking to increase the agriculture, logistics, tourism, and information/communication technology (ICT) sectors. Azerbaijan is also taking steps toward more sustainable energy production, particularly in the newly returned territories.
The government heavily subsidizes machinery and other agricultural inputs, targeting hazelnuts, rice, citrus fruits, tea, tobacco, and cotton. Azerbaijan has also launched a series of projects to develop north-south and east-west trade and transit corridors to turn the Port of Alat (Baku International Sea Port) and the adjacent Free Trade Zone (FTZ) into regional logistics and transportation hubs. To promote tourism, the government has waived visa requirements for several countries and simplified the application process, enabling U.S. citizens to apply for and receive an e-visa online within three hours by paying an expedite fee. The government has also created several high-tech parks as part of its effort to bolster the ICT sector.