Furthermore, Azerbaijan invested in order to gain access to additional markets and strengthen its presence in the international economy, and the country has committed capital to sectors such as energy, real estate, infrastructure, and tourism.
Azerbaijan’s economy has seen an impressive rate of growth over the past decade. According to the World Bank, the country’s Gross Domestic Product (GDP) increased by 1.4% in 2020, despite the global pandemic. This serves as a testament to the fortitude of Azerbaijan’s economy, which has endured multiple economic disturbances in the past. Estimations suggest that Azerbaijan’s Gross Domestic Product is approximately $54 billion, with an average annual increase of 1.9% over the past four years. Azerbaijan has experienced a steady low rate of unemployment over the past decade, with an average of 5%, indicating a strong labor market and a prosperous business environment.
Azerbaijan has cultivated wise investments in fields that demonstrate promising growth and profitability. The efforts of the nation to broaden its economic base have proven successful, resulting in a decrease in its reliance on petroleum. Azerbaijan has achieved notable success in diversifying its economic base and diminishing its dependence on oil exports. The non-oil exports of Azerbaijan have been rising continuously in the recent years; as reported by the Azerbaijan Export and Investment Promotion Agency (AZPROMO), there was a 47.2% ($2713.40 million) and 12.3% ($3047.67 million) increase in 2021 and 2022 respectively. Between January and February of 2023, the country recorded an increase of 36.6% in non-oil export earnings, amounting to approximately $651.42 million, compared to the same period the year before.
Multinational corporations from around the world are highly eager to access Azerbaijan’s natural resources, mainly its oil and gas reserves. In 2020, Azerbaijan’s oil production reached 33.5 million tons, followed by 29.5 million tons and 32.8 million tons in 2021 and 2022 respectively, as reported by the State Oil Company of the Republic of Azerbaijan (SOCAR), thus placing the nation among the major oil-producing countries in the region. Oil production is projected to reach 35 million barrels in 2023. According to the Oil and Gas Journal, Azerbaijan has more than 2 trillion cubic meters of natural gas reserves, representing a significant opportunity for energy companies worldwide.
In 2020, Azerbaijan attracted a total of $4.5 billion in foreign direct investment (FDI):
Azerbaijan saw a 5.9% increase in Foreign Direct Investment (FDI) compared to the past year, which made it one of the most prominent FDI recipients within the Commonwealth of Independent States (CIS) area. In 2020, the United Kingdom, Turkey and the United States were the top three countries by FDI in Azerbaijan, with the United Kingdom contributing $1.7 billion, Turkey investing $577 million and the United States investing $475 million, according to the Central Bank of Azerbaijan.
Furthermore, the Sustainable Development Goals (SDG) Index reveals that Azerbaijan has made substantial strides in reaching the objectives that were put in place by the United Nations across multiple domains. According to the SDG Index, the rate of global poverty has decreased from 49.6% in 2010 to 5.9% by 2022. Azerbaijan’s Global Hunger Index (GHI) has seen a positive trend, decreasing from 14.5 in 2010 to 9.7 in 2019 and further to 7.5 in 2022. The citizens of the country have reaped the benefits of its efforts to bolster health and well-being, as evident by the increase in life expectancy from 68.6 years in 2010 to 73.3 years in 2022. Azerbaijan’s commitment to improving the standard of living for its people and promoting economic growth in a sustainable manner are reflective of its commitment to the achievement of the Sustainable Development Goals.
In 2019, Azerbaijan achieved a ranking of 25th place in the World Bank’s Ease of Doing Business report, which marks a notable enhancement of 32 places from the previous year and highlights a favorable business climate for foreign investors. In 2020, the World Bank’s Ease of Doing Business Report ranked Azerbaijan 34th among 190 countries, with a score of 76.7 for the ease of setting up a business.
Taking all factors into consideration, Azerbaijan is a highly attractive investment opportunity for a variety of industries, including energy, tourism, agriculture, and technology. In order to stimulate foreign investment, the government has put in place a variety of incentives to simplify the foreign investment process. Azerbaijan is an attractive option for investors to expand their investment portfolios and explore new markets due to its attractive business environment, strategic location, and robust economic growth. Moreover, Azerbaijan’s foreign investments have had a considerable influence on the nation’s economic growth. The country has leveraged investments to expand its portfolio and reduce its reliance on oil and gas industries, as well as to access novel markets.
Kanan Mammadov
