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Economy
Growth reached 2.2% in 2012 from near stagnation in 2011, as Azerbaijan's oil sector contracted less and activity outside of the oil sector accelerated. Smaller oil exports narrowed the current account surplus, but foreign direct investment, mainly in oil and gas projects, rose by more than 20%. Higher public investment spending, supported by transfers from the State Oil Fund, is expected to help spur growth to 3.1% in 2013 and, as oil production increases, to 4.8% in 2014.
| Selected Economic Indicators (%) - Azerbaijan | 2013 | 2014 |
|---|---|---|
| GDP growth | 3.1 | 4.8 |
| Inflation | 6.0 | 7.0 |
|
Current account balance (share of GDP) |
13.0 | 17.0 |
Sources: ADB estimates.
Economic performance
Growth improved to 2.2%, following near-zero growth in 2011. Oil output declined less, contracting by 5.0%, and expansion continued in the other sectors of the economy, which grew by 9.7%.
On the supply side, industry contracted by 1.9%, following the 3.4% increase in 2011. The 2012 contraction mainly reflected poor performance in the oil sector, where output fell by 5.3% because of repairs at the main Azeri-Chirag-Ginashli oil platform. Other industrial output rose by 7.8%.
Services were a major source of growth, rising by 9.9%, with wholesale and retail trade growing by 9.6%. Growth also reflected strong performances in oil transportation, which grew by 5.0%, and in communications, which grew by 16.8%.
On the demand side, consumption and investment were the main sources of growth. Consumption rose by 2.9%. Total investment, at about 23% of gross domestic product (GDP), grew by 20.9%, with most of the growth in public investment.
Economic prospects
The major driver of growth in 2013 and the next few years is expected to be activity outside the oil sector. Energy output will grow little through 2015 but is expected to expand more once gas field development is completed and the exploration of new oil fields proves successful, most likely after 2015. Planned public spending will boost public investment, while ongoing energy projects will increase foreign direct investment. New regulations on capital adequacy may allow increased lending to boost private investment.
Growth is forecast to accelerate to 3.1% in 2013 and climb further to 4.8% in 2014, mainly because of public spending outside the oil sector and, in 2014, some increase in oil production.
Source: ADB. 2013. Asian Development Outlook 2013. Manila.