Azerbaijan’s days of explosive growth, driven by rising energy production, appear to be over. Baku is now emphasizing economic diversification, but the early returns are mixed as to whether non-energy sectors can place Azerbaijan in a stable growth trajectory.
Back in 2007, Azerbaijan’s annual GDP growth rate stood at roughly 30 percent. This year’s annual rate is projected to be less than 4 percent, according Zohrab Ismayil, the head of Assistance to Free Economy, a Baku-based non-governmental think-tank. Over the first half of the year, government statistics show the country’s economy grew at a modest 0.9 percent rate, thanks mainly to 7.2-percent growth in non-energy sectors.
For most of the last two decades, Azerbaijan’s economy was synonymous with the oil & gas sector, prompting experts to express concern about Baku’s vulnerability to Dutch disease, or an economic over-dependence on energy exports. Currently, the energy sector accounts for 91 percent of Azerbaijan’s exports, and is responsible for generating just under half the country’s GDP. Tariffs, fees and sales from energy exports also account for 74 percent of state revenues.
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Shahin Abbasov is a freelance reporter based in Baku and a board member of the Open Society Assistance Foundation-Azerbaijan.