Azerbaijan economy contracted 4.2% y/y in 5M16
In 5M16, real GDP declined 4.2% y/y, with non-oil GDP down 7.0% y/y and oil GDP up 1.0% y/y. The construction sector, which contracted 37.0% y/y, continued to weigh on overall growth, followed by transportation and storage (-9.5% y/y). Excluding the construction sector, the fall in non-oil GDP moderated from 1.4% y/y in 4M16 to 1.0% y/y in 5M16. Positive contribution came from trade (+1.9% y/y), agriculture (+5.8% y/y), and manufacturing (2.3% y/y).
In nominal terms, GDP increased 5.6% y/y to AZN 21.5bn in 5M16, while in US$ terms, output decreased 35.7% y/y to US$ 13.9bn.
NPLs at 7.4% in April 2016
An increase in non-performing loans in AZN terms (+4.1% m/m) and a fall in the total loan portfolio (-4.7% m/m) resulted in NPLs going up from 6.7% in March 2016 to 7.4% in April 2016, the highest level since 2004. The contraction in the loan portfolio in April was driven mainly by a 9.2% m/m contraction in the state banks’ loan portfolio (-16.8% y/y). Foreign currency loans decreased 6.4% m/m in April 2016, while the loan portfolio in local currency was down 3.1% m/m. At sectoral level, the fall in the loan portfolio was driven by reduced lending to households (-5.2% m/m), construction and real estate (-6.8% m/m), industry (-11.7% m/m), and trade and services (-4.4% m/m).
Deposit dollarization inched down to 80.8% in April 2016
As deposits decreased in both local and foreign currencies, total deposits retreated to AZN 22.6bn (-2.4% m/m) in April 2016. However, as the decrease in FX deposits was higher, the deposit dollarization ratio retreated slightly to 80.8% in March (-0.2ppts m/m).
Oil and gas extraction up in May 2016
According to SOCAR, oil and natural gas extraction in Azerbaijan was up 4.1% y/y and 2.7% y/y, respectively, in May 2016 (-0.6% y/y and +0.9% y/y, respectively, in 5M16). While SOCAR’s output of oil and gas declined, an increase in the output of other producers was more than enough to bring overall production to positive territory.
Azerbaijan’s external public debt up 8.0% q/q in 1Q16
Azerbaijan’s external public debt increased 8.0% q/q to US$ 7.4bn in 1Q16. A bulk (US$ 6.1bn) of this debt is owed to international financial institutions and only 17.7% (US$ 1.3bn) is issued in the form of Eurobonds on international capital markets.
