Early this week, the Azerbaijan’s Central bank Governor criticized on economic situation in #Armenia, so here is a short analysis of “super-diversified”, rich and prosperous, “home of democratic institutions” – #Azerbaijan and its economy. A thread.
As reachable and reliable source as IMF, sadly, stated that some data provided by Azerbaijan is at least questionable, the unemployment rate being one possible example of it. Here it is competing with U.S. one: stable 5% for over decades.
No sign of diversification (surprise!): oil sector accounts for some 41% of GDP, 92% of exports, and 65% of fiscal revenues. With breakeven oil price at 63$ in 2020 – much higher than the actual price of 40$ , it leaves you with math to calculate the “profits” of Azerbaijan.
Due to slumped oil prices, Azerbaijan was in deep mess in 2014, ending up in banking crisis and deep recession. The real GDP recovered from negative numbers only three years later, amounting to 1.4%. It “peaked” to 2.2% in 2019, still below the average of emerging countries.
Moreover, the recession was accompanied with double-digit inflation numbers of some 12% during the last crisis, which again rises some questions regarding the all-time-stable unemployment in this country.
The central bank’s governor was so proud of their external and fiscal position, that he simply forgot that the current account and budget deficit of Azerbaijan reaches some -30% of GDP without oil, while public debt stays as high as 50% to GDP, a mere joke for oil-rich country.
The dollarization increased to 81.6% in late 2015 and even after stabilizing remained at high level (65.3% in 2018). Financial intermediation remains weak, and the pegged exchange rate continues to encourage dollarization as insurance against devaluation and high inflation.
Unhedged FX positions, and non-performing loans are still high, with some banks being undercapitalized or insolvent. The largest bank of the oil-state, IBA, still struggles to figure out a viable business model.
As it was pointed out by the IMF in 2019 “the exhaustibility of oil resources and the need to create jobs for young, Azerbaijan’s economic future depends on its ability to reduce the economic footprint of the state, promote competition, and improve governance and transparency”.
Apparently, the IMF didn’t know that there was another escape from internal problems for Aliyev family – an all-out war! #StopAliyev #StopAzerbaijaniAggression