Current account deficit down to US$ 250.1mn in 4Q16
In 4Q16 Azerbaijan’s current account deficit narrowed 46.0% y/y to US$ 250.1mn. The improvement was driven by a 153.3% y/y increase in the trade surplus. Oil and gas exports were up 14.5% y/y to US$ 3.3bn, while imports were down 43.4% y/y to US$ 0.5bn. Non-oil sectors, however, posted a US$ 1.5bn deficit, up 1.9% y/y.
In the services balance, on the other hand, the oil and gas sector led to a widening of the deficit to US$ 0.9bn (+11.2% y/y) in 4Q16. The oil and gas services deficit widened 35.9% y/y to US$ 0.8bn, while the non-oil service balance narrowed 53.5% y/y to US$ 0.1bn.
FDI inflows up, capital outflows down
Net other investments outflows were down 34.8% y/y to US$ 1.4bn, portfolio investment outflows were down 90.2% y/y to US$ 45.9mn, and reserves increased by US$ 0.7bn in 4Q16. These outflows and the current account deficit were financed by a 260.6% y/y increase in net FDI inflows (US$0.8bn) and 121.5% y/y increase in inflows from the “errors and omissions” category (US$ 1.7bn).
Non-oil FDI inflows were up 252.5% y/y to US$ 568.2mn in 4Q16.
Annual current account deficit reached US$ 1.4bn in 2016
Driven by falling oil and gas exports, Azerbaijan’s current account balance posted a US$ 1.4bn deficit in 2016, the highest since 2004 in nominal US$ terms. The oil and gas sector current account surplus narrowed 32.9% y/y in 2016 to US$ 4.4bn, while the non-oil current account deficit retreated 15.0% y/y to US$ 5.8bn.
Annual deficit financed by errors and omissions inflows, FDI, and reserves
In 2016 net other investments were down 49.3% y/y to US$ 5.2bn, while portfolio investment outflows were up 24.3% y/y to US$ 0.5bn. These outflows and the current account deficit were financed by net FDI inflows (US$1.9bn, +145.1% y/y), inflows from the “errors and omissions” category (US$ 3.6bn), and reserves (US$ 0.5bn).
Non-oil FDI inflows were up 106.4% y/y to US$ 1.7bn in 2016.
As a ratio to GDP, the current account deficit was up to 3.6% in 2016 from 0.4% in 2015, while the non-oil current account deficit was up to 23.3% from 18.3% in the previous year.
