Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Azerbaijan’s GDP totaled AZN 72.4 billion ($42.5 billion) with a 4.3% decrease during 2020. In this period, the country’s non-oil GDP fell by 2.6%, and oil GDP fell by 7%. In 2020, 33.7% of Azerbaijan’s GDP came from energy, 11.5% from trade, 6.9% from agriculture, 7.1% from transportation, 7.7% from construction, 2% from information and communication, and 1.2% from tourism. Azerbaijan reported a foreign trade decrease of 26% at $24.4 billion. The country also reported an overall decrease in net exports, with exports declining by 30% year-on-year to $13.74 billion, and imports decreasing by 21% to $10.73 billion. The trade turnover between the United States and Azerbaijan was $660 million, a 16% decrease during 2020. Over this year, the U.S accounted for 2.7% of Azerbaijan’s total trade with the world. Azerbaijan’s exports to the United States increased by 3% at $24.9 million, while imports dropped by 17% at $635 million.
Azerbaijan’s economy is anchored in oil and gas production, which accounted for 40% of the country’s GDP and 86% of its 2020 exports. The oil and gas sector, however, only accounts for 5% of total employment in Azerbaijan. While Azerbaijan is paying increasing attention to other sectors of its economy, the oil and gas sectors continue to grow as well. In 2018, President Aliyev formally inaugurated the Southern Gas Corridor (SGC) with a “first gas” ceremony drawing from the second phase development of the Shah Deniz offshore gas field. The first deliveries of natural gas to Italy via the Trans-Anatolian Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP) began in January and November 2020, respectively.
Currently, work is underway to restore Azerbaijan’s newly recovered territories, with the government allocating $1.5 billion for reconstruction works in 2021. These funds will be used to restore 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, paying particular attention to the agriculture, logistics, tourism, and information/communication technology (ICT) sectors. 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 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.