Azerbaijan economy contracted 3.3% y/y in January, with non-oil GDP down 3.7% y/y and oil GDP down 2.4% y/y. The contraction was driven by a strong decline in construction (-24.5% y/y), transport and storage (-12.3% y/y), and mining (-2.6% y/y). Positive contribution to growth came from trade (+4.3% y/y), information and communication (+7.9% y/y), and tourism (+5.1% y/y).
Nominal GDP for January 2015 was revised downward (by 5.2%), thereby lessening contraction figures for January 2016. In nominal terms, GDP in January 2016 increased 12.0% y/y to AZN 4.0bn, while in US$ terms, it declined 44.6% y/y to US$ 2.5bn.
2016 budget to be revised with US$ 25.0/bbl oil price assumption
Azerbaijan is revising its 2016 budget to account for the lower oil price than originally assumed and the mid-December devaluation. The oil price assumption will be set at US$ 25.0/bbl, compared to US$ 50.0/bbl in the original document, resulting in a fall in budget revenues. At the same time, the government is planning to increase spending, as the second devaluation has resulted in price increases and the government wants to increase social spending. Increased expenditures will be financed by higher transfers from the Oil Fund, increased non-oil taxes, and higher customs receipts. At the same time, oil taxes and oil fund revenues will be lowered, pushing up the consolidated budget deficit.
Azerbaijan’s external state debt increased to 19.8% of GDP in 2015
Azerbaijan’s external state budget debt increased 6.4% y/y to US$ 6.9bn in 2015. However, as a ratio to GDP, the figure is up from 8.6% in 2014 to 19.8% in 2015, as the dual devaluation in 2015 decreased the nominal size of economy in US$ terms.
Trade surplus shrank 69.5% y/y to US$ 214.3mn in January 2016
In January 2016, exports declined 48.6% y/y to US$ 657.1mn, imports fell 22.9% y/y to US$ 442.8mn, and the trade surplus shrank 69.5% y/y to US$ 214.3mn. The fall in exports was broad-based, with mineral exports falling 48.2% y/y to US$ 599.1mn and non-mineral exports falling 52.3% y/y to US$ 58.0mn. On the imports side, the decline was driven by an 80.0% y/y fall in transportation imports and 56.3% y/y drop in foodstuff imports. Number of cars imported decreased from 4,090 in January 2015 to 437 in January 2016.
