Trade: non-oil balance improves
According to the Customs Committee, Azerbaijan’s merchandise exports increased by 10% y/y in June 2014, while imports decreased by 25% y/y. For 1H14, however, total exports fell by 6% y/y, while imports declined by 20% y/y. The growth in exports in June was mainly driven by agricultural products and minerals (crude oil, natural gas, and oil products).
Contraction in imports, on the other hand, was a result of slower economic growth and new regulations that ban imports of older used cars and stricter rules on consumer loans. For example, the fall in imports of iron and steel, glass and glassware, various machinery, and wood, among others, could be explained by falling demand in the construction sector. In this category, imports of cement also fell dramatically. However, this was probably caused by the inauguration of the Akkord Cement plant in the Qazakh district resulting in the substitution of imported cement with local cement.
Car imports in US$ terms, declined by 26% y/y in June, while the number of cars imported declined by 54% to 3,783 units. Imports of electronic consumer goods such as TVs, cameras, and sound recorders fell for a fourth month in a row in June, decreasing by 44% y/y after a fall of 55% y/y in May. This can probably be explained by the new strict regulations on consumer credit implemented in early 2014.
Following a pick-up in April, the non-energy trade balance improved for the second consecutive month on the back of falling imports. The trade deficit decreased to US$ 0.4bn in June from US$ 0.9bn in April. As the factors behind the current trend are expected to remain in place for the remainder of the year, the trade deficit will keep contracting.
