Gulshan Pashayeva
21-01-2010
It was quite interesting to listen to three different perspectives on the global economic crisis. I would like to reflect shortly on the situation in Azerbaijan. It is often thought that Azerbaijan can ride out of the crisis easily because its economy is strong. Indeed, if we can look at the situation in the last 5 years, Azerbaijan’s economy has been growing steadily. In 2006, Azerbaijan had the highest GDP growth rate in the world – 34.5%. In 2007, the growth rate was at 35% and at 10.8% in 2008. Despite the crisis, Azerbaijan is the fastest growing country in the region. In September, the government released an astonishing estimate of 12.9% GDP growth. Right now, the GDP growth rate is at 8.3%, which is quite close to what was estimated by the government. In the Global Competitiveness Report 2009-2010, it was estimated that Azerbaijan occupies the 51st place in terms of measurable improvements, with strong and improving macroeconomic stability, and 27th place in terms of national savings, budget surplus, and low government debt. High inflation, however, raises concerns.
Azerbaijan is not very integrated into the global financial system. Azerbaijan has no well-developed stock market. This may not be a bad thing in the current situation. Azerbaijan has oil and gas, and these revenues are tremendously helpful. For all these reasons, Azerbaijan was less affected by the crisis.
However, challenges may arise in the event of prolongation of the global financial crisis. The question is whether Azerbaijan’s economy will resist the adverse effects of the crisis. Much will depend on future policy with regard to the diversification of Azerbaijan’s economy and the reduction of its dependence on oil revenues. The government should understand how to diversify the economy through investment in non-oil sectors. Azerbaijan Investment Company, set up a few years ago, is trying to invest in sectors other than oil.
