Azerbaijan - Market OverviewAzerbaijan - Market Overview
The Azerbaijani economy continued to improve in 2018 after recovering from the 2015 crisis in 2017. Low world oil prices from 2014 to 2016 hit Azerbaijan’s economy hard, resulting in two currency devaluations in 2015, high inflation in 2016-2017, and the closure of several banks.
Azerbaijan's real GDP grew 1.4% in 2018 as the price of oil recovered, growth in the non-oil sector increased, and the government raised public investment. The Economist Intelligence Unit forecasted real GDP growth of 1.8% in 2019, 2.1% in 2020, and 2.6% in 2021.
Exports rose by 41% and imports by 30% in 2018, compared to 2017, resulting in a trade surplus of $8.1 billion.
As a result of the economic downturn, Azerbaijan began a program to diversify its economy, targeting the agriculture, regional transportation, 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 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 efforts to bolster the ICT sector.
Despite this progress, oil and gas are the primary economic drivers and are directly responsible for 44% of Azerbaijan’s GDP and more than 90% of exports, but only 5% of employment. In June 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. First deliveries to Italy via the Trans-Anatolian Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP) are likely to begin in 2020/2021.