The Economy of Azerbaijan 2021: An upswing from Economic Rebound with the Risks in Scenario

The year 2020 posed an unprecedented challenge to the World economy with the outbreak of the Covid-19 pandemic shrinking the global GDP by 6,7%1 and bringing worldwide severe economic repercussions. Thanks to the massive vaccination program, global economic recovery was experienced in 2021 and economic growth has been sustained largely with the revival of demand for goods and services. On the other hand, supply shortages with respect to the demand, increasing energy and food prices, supply chain problems trigger higher inflation rates in most countries. Moreover, the widespread of Omicron variant in the second half of 2021 produced uncertainties about global economic growth in the following period. Notwithstanding the continuation of pandemic-related negative consequences, the scaling up of vaccination process, entrepreneurial support, a relatively favorable state of the global economy, and loosened quarantine restrictions contributed to economic recovery in 2021 in Azerbaijan leading to a growth in oil as well as the non-oil sector of the economy. The recovery has been stronger than expected on the back of rising oil and gas prices. GDP growth accelerated to 4.8 percent year-on-year in the period January to September 2021(EBRD, 2021), particularly by a non-oil sector. Foreign economic activities of Azerbaijan were being developed with the increasing rate of crude oil price and expansion of non-oil exports to the trade partners owing to the economic upswing in them. Foreign trade turnover in the previous year accounted for 33.9 billion US dollars. The nation’s trade surplus reached the value of 10.5 bln US dollars surging 3,5 times compared to 20202 and Italy, Turkey, Russia, China, Germany, Israel and Ukraine were the top trading partners. The year 2021 is accompanied by a 61.6% and 46.6% increase in total exports and non-oil exports respectively. It is noteworthy to mention that in 2021 non-oil exports amounted to the record level of 2,7 billion US dollars exceeding the pre-pandemic level. Exports more than ...