hosted by
funded by
Country Report Azerbaijan May 2011
PDF
HTMLEconomic performance: The current-account surplus increases in 2010
The current-account surplus rose significantly in 2010, to just over US$15bn, according to data from the Central Bank of the Azerbaijan Republic. The current-account surplus fell to US$10.2bn in 2009 (from US$16.5bn in 2008) owing to the negative impact of lower oil prices and tight global financial conditions. The sharp increase in the current-account surplus was primarily driven by an increase in the trade surplus. Goods imports increased modestly, to US$6.7bn from US$6.5bn in 2009, but goods exports rose much more rapidly, to almost US$26.5bn-an increase of 25.5%-according to Central Bank data. Imports of consumer goods and imports for the energy sector increased. However, goods imports remained below the US$7.6bn level in 2008, indicating that consumer demand remains weak. As in previous years, the vast majority of export revenue was derived from the oil and gas sectors; in 2010 these sectors accounted for almost 95% of total export revenue. The drivers behind the increase in export revenue in 2010 were higher oil prices and an increase in external demand. Unlike in 2009, when a 13.5% increase in oil production mitigated the impact of lower global oil prices on the balance-of-payments dynamics, oil production expanded by only a marginal 0.9% in 2010.
| Balance of payments | ||||||||||
| (US$ m) | ||||||||||
| 2009 | 2010 | |||||||||
| 1 Qtr | 2 Qtr | 3 Qtr | 4 Qtr | Year | 1 Qtr | 2 Qtr | 3 Qtr | 4 Qtr | Year | |
| Current-account balance | 1,795 | 2,686 | 2,610 | 3,082 | 10,173 | 3,902 | 4,059 | 4,016 | 3,063 | 15,040 |
| Trade balance | 2,110 | 3,805 | 4,154 | 4,515 | 14,583 | 5,041 | 5,196 | 5,181 | 4,313 | 19,731 |
| Goods exports | 3,587 | 5,256 | 5,947 | 6,307 | 21,097 | 6,258 | 6,934 | 6,888 | 6,396 | 26,476 |
| Oil & gas sector | 3,416 | 5,022 | 5,580 | 5,952 | 19,970 | 5,914 | 6,576 | 6,616 | 6,002 | 25,108 |
| Other sectors | 171 | 234 | 367 | 355 | 1,127 | 345 | 358 | 272 | 394 | 1,369 |
| Goods imports | -1,477 | -1,451 | -1,793 | -1,792 | -6,514 | -1,218 | -1,738 | -1,707 | -2,083 | -6,746 |
| Oil & gas sector | -202 | -166 | -172 | -159 | -700 | -128 | -244 | -223 | -243 | -838 |
| Other sectors | -1,275 | -1,285 | -1,621 | -1,633 | -5,814 | -1,090 | -1,494 | -1,484 | -1,840 | -5,908 |
| Services balance | -268 | -332 | -318 | -695 | -1,613 | -417 | -359 | -376 | -581 | -1,733 |
| Income balance | -214 | -947 | -1,376 | -981 | -3,519 | -795 | -922 | -968 | -781 | -3,466 |
| Current transfers balance | 167 | 160 | 151 | 244 | 722 | 74 | 144 | 179 | 112 | 509 |
| Capital & financial account balance | -2,979 | -978 | -866 | -1,195 | -6,019 | -1,193 | -1,106 | -319 | -965 | -3,583 |
| Net foreign direct investment | 102 | -9 | 2 | 50 | 147 | 47 | 110 | 169 | 3 | 329 |
| Portfolio & other investments | -3,081 | -969 | -869 | -1,245 | -6,165 | -1,240 | -1,223 | -488 | -970 | -3,921 |
| Oil bonus | 0 | 0 | 1 | 0 | 1 | 0 | 0 | 0 | 2 | 2 |
| Balancing items | -859 | -148 | -327 | -130 | -1,463 | -136 | -512 | -399 | 59 | -988 |
| Change in reservesa | 2,043 | -1,560 | -1,417 | -1,757 | -2,691 | -2,573 | -2,434 | -3,298 | -2,157 | -10,462 |
| a A minus sign indicates an increase. | ||||||||||
| Source: Central Bank of the Azerbaijan Republic. | ||||||||||
Download the numbers in Excel
The services deficit expanded to US$1.7bn in 2010 from US$1.6bn in 2009, in part reflecting the increase in construction expenditure as the pace of investment increased. The income deficit was essentially unchanged from 2009; profit repatriation by foreign investors (mostly in the hydrocarbons sector) increased, but this was essentially offset by a rise in income credit. Inward foreign direct investment (FDI) rose to US$3.3bn in 2010 from US$2.9bn in 2009, although this figure remains below the levels seen in the pre-crisis period. Outward FDI fell to US$232m in 2010 from US$326m in 2009, but the net FDI outturn was weighed down by an increase in repatriation of capital by foreign investors, which was just under US$2.8bn in 2010. Nonetheless, the increase in inward FDI was more than sufficient to offset the increase in repatriation of capital and Azerbaijan recorded net FDI of US$329m in 2010, up from US$147m in 2009. FDI, particularly in the run-up to the coming on stream of the second phase of the Shah Deniz project (expected in 2016-17), is expected to rise in the coming years.
