Current account balance in deficit for the second quarter in a row
Azerbaijan’s current account balance posted a deficit of US$ 432.2mn (5.4% of GDP) in 1Q16, following a US$ 463.0mn deficit in the previous quarter. The non-oil current account deficit narrowed 54.3% y/y in 1Q16 to US$ 1.0bn (18.4% of non-oil GDP), while the oil surplus declined 75.7% y/y to US$ 522.5mn.
Export of goods was down 39.9% y/y, as both oil and non-oil exports fell. On the import side, oil imports were up 124.4% y/y, while non-oil imports were down 46.0% y/y.
The services deficit narrowed 38.3% y/y to US$ 699.4mn, on the back of improvement in construction and transportation balances, with the latter posting a US$ 64.9mn surplus compared to a US$ 18.8mn deficit in 1Q15.
Net FDI at US$ 93.5mn in 1Q16
In 1Q16, FDI inflows to Azerbaijan, net of investment repatriations, declined 15.1% y/y to US$ 864.1mn and outward investments from Azerbaijan were down 24.0% y/y to US$ 770.6mn. As a result, net FDI was up 27.5x y/y to US$ 93.5mn in 1Q16.
Non-oil FDI inflows in 1Q16 fell 3.3% y/y to US$ 234.7mn, while non-oil FDI outflows increased 24.3% y/y to US$ 211.6mn, resulting in a 68.1% y/y fall in net non-oil FDI outflow.
Capital outflows increased; gap filled from reserves
Net capital outflows, measured by portfolio and other investments flows, were down to US$ 2.0bn in 1Q16 from US$ 4.4bn in 1Q15 and US$ 2.6bn in 4Q15. The resulting gap in the external balance was financed by a US$ 1.3bn decline in reserves (-72.3% y/y).
Trade in deficit for the third month in a row
Exports decreased 40.7% y/y in May 2016, driven by a 45.3% y/y drop in mineral exports. The decline in non-mineral exports moderated to 9.9% y/y in May 2016. Imports, on the other hand, increased 10.9% y/y to US$ 737.4mn, resulting in a US$ 137.2mn trade deficit.
