The Economy of Azerbaijan in 2017 -Brief Overview

Abstract

The year 2017 posed severe challenges for the economy of Azerbaijan, as it experienced a 3.1% decline in 2016, its first negative GDP growth since 1995. According to initial estimations of EBRD, the economy was expected to experience another negative GDP growth equal to 0.5% in 2017. However, The State Committee of Azerbaijan Republic has announced 0.1 % positive growth in GDP in 2017. The recessionary environment coupled with the continuing fall in oil prices in early 2017 made matters look grim for the country, whose economy is massively dependent on the oil sector. Inflation, according to the State Statistical Committee, is still as high as 12.9%. In the meantime, growth in wages is lagging far behind the inflation rate, which decreases the purchasing power of the population. The trend of declining state budget expenditures stopped this year, with a new amendment in July, after oil prices surged. According to the Ministry of Finance, the deficit of the executed state budget has reached 1,141 million manat or, in terms of dollars, 671.4 million US dollars. As a result, high government spending continues to be a potential obstacle that can hinder the development of the private sector.