Non-oil trade balance improved on the back of falling imports
Following a strong decline in the first months of the year, Azerbaijan’s exports started to recover since May 2014. After 19% and 10% YoY increases in May and June, total exports grew 5.7% in July. Non-oil exports started an upward trend in June and continued in July with 11% and 26% YoY growth rates, respectively. Oil exports (93% of total exports) increased 5% YoY in July 2014. Plastics and pharmaceuticals were the driving force for growth of non-oil exports in July.
Fall in imports, however, continued in July, with a monthly decline of 25% YoY (21% YTD). Imports were declining in almost all categories. The biggest contributors to the reduction were iron products, likely down as a result of a slower construction sector, which expanded by only 11% in the 7M14 vs 30% in the same period of 2013. With imports falling and exports increasing, Azerbaijan’s non-oil trade deficit continued to narrow from US$ 897mn in July 2013 to US$ 607mn in July 2014 (from US$ 5.2bn in 7M13 to US$ 3.9bn in 7M14).
Azerbaijan Economy: January-July 2014
Azerbaijan’s growth accelerated slightly in July 2014. Improved oil output more than offset fall in agricultural output with the overall GDP increasing 2.4% YTD in July (compared to 2.1% YTD in June). Supported by the construction, services and manufacturing, non-oil sectors grew at 6.8% YTD, but lower than 7% YTD in June. Fall in agricultural output (-4.2% YTD) was the main reason behind slower growth in non-oil GDP. Contrary to agriculture, refinery output is back on track, bringing total manufacturing to a positive territory. In monthly terms, production of all major refinery products is equal or above the monthly average of 2013. At the same time, new cement plants are yielding results with cement production reaching 300 thousand tons, 77% higher than monthly average of 2013. Agricultural output was disappointing with maize and wheat production down by more than 20% compared to the same period of 2014.
Oil GDP contracted as well but the fall was caused by the lower production in 1Q14. The oil production increased slightly in April (2.8% in YoY terms) and stabilized at an average of 3.6mn tonnes per month since then. On a monthly basis, oil output was 1% higher in July YoY.
