From January to August of 2020, Azerbaijan's economy recorded a collapse of 3 percent. In August, industrial production declined by 3.1 percent. According to predictions of the Asian Development Bank, Azerbaijan's GDP will decline by 4.3 percent this year. 

According to the 2020 report on “Doing Business” Azerbaijan has recorded a retreat in rating system by 9 points compared to last year, which once more testifies continuous failures of Azerbaijan economic reforms.

There is an impression that Azerbaijan and Turkey hadn’t at all evaluated economic losses before starting the war, especially loss risks.

Only in 2019 foreign direct investments (FDI) in Azerbaijan declined by 3 billiard US $ or 3 times compared to 2016. This attests that Azerbaijan is losing trust of foreign investors and investment attractiveness year by year. 

Surely, the Four-day War of April 2016 also struck a huge blow for Azerbaijan's investment environment. And the existing investments are directed mainly to the oil and gas sector, incomes of which only Azerbaijan's ruling regime continues to use greedily.

The Covid pandemic has caused serious social problems for the population, especially, according to the August report of Khazar University it was accounted that 1.3 million people can become unemployed because of this pandemic, that is - every 4th employee will lose his/her job.

From January to August of 2020 general export of Azerbaijan has declined by 3.6 billion US $ or by 36,1 percent, and not oil export (mainly tomatoes, gold and cotton) has declined by 9.7 percent.

Because of decline of foreign trade during the first eight months of 2020 entries from custom duties of Azerbaijan have decreased by 8 percent compared to the same period of the last year. And Azerbaijan authorities supplement it at the expense of reverses. 

It’s obvious that the Azerbaijan Government hasn’t carried out economic reforms for years and has a great dependence on the oil and gas sector, and the losses caused by war will make the economic crisis deeper by causing a huge wave of social and political dissatisfaction.

Suren Parsyan
Head of ARF Bureau’s Economic Research Office,
Phd in economics

photo: yerevan.today