Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements.
Last Published: 2/13/2019
2017 was marked by the stabilization of the Azerbaijani economy following the economic crisis in 2015 and associated stagnation in 2016. Low world oil prices from 2014 to 2016 hit Azerbaijan’s economy hard, resulting in two currency devaluations in 2015, inflation at 13% in 2017, and the closure of several banks. Azerbaijan's GDP grew 0.1% in 2017, recovering from a 3.8% contraction in 2016 as the price of oil recovered, growth in the non-oil sector increased, and the government raised public investment. According to Asian Development Bank (ADB), IMF, and EBRD forecasts, GDP is expected to grow by 1.7% to 2.5% in 2018, and by 2% to 3.5% in 2019. Exports rose by 34% and imports by 3% in 2017, resulting in a trade surplus of $5 billion.

As a result of the economic downturn, Azerbaijan decided 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 as part of its New Silk Road vision to turn Azerbaijan into a logistics hub, primarily through the Port of Alat and the adjacent Free Trade Zone (FTZ). To promote tourism, the government has waived visa requirements for several countries and simplified the application process, enabling U.S. citizens to apply and receive an e-visa in as little as three hours by paying an expediting 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 remain the primary economic drivers and are directly responsible for 35% of Azerbaijan’s GDP and almost 88% of exports, but only 5% of employment. Furthermore, since proceeds from oil and gas underpin government support to agriculture, construction and other industries, even the non-hydrocarbon sectors of the economy are sensitive to oil price changes. In May 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 in 2020/2021.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.

Azerbaijan Trade Development and Promotion