World Economy

Azeri Economy Slows

Azeri Economy SlowsAzeri Economy Slows

Azerbaijan’s economic growth slowed to 1% last year from 2.8% in 2014, well below official forecasts, due to low oil prices and the devaluation of the national manat currency, the country’s president said on Sunday. The country had forecast 3.3% growth for 2015.

“Decline in world oil prices and the national currency devaluation had a negative impact on Azerbaijan’s economy,” Ilham Aliyev told a government meeting, Reuters reported.

“Reasons for such a difficult situation are outside our country and these reasons are rather political, than economic,” he added.

Aliyev said the non-oil sector grew by 8.4% last year.

Economic growth in Azerbaijan has slowed dramatically since the oil boom of 2003-2007, when the economy expanded by an average of 21% per year.

The Azeri economy is now suffering from low energy prices and the repercussions of an economic crisis in neighboring Russia.  

Oil and gas account for 95% of Azeri exports and 75% of government revenues, making the Caspian Sea republic particularly vulnerable.

Azerbaijan withdrew support for its currency, the manat, on Dec. 21, triggering losses of 47.6% against the dollar, after burning through over half its foreign currency reserves to defend it against the effect of falling oil prices.

Baku’s decision followed similar moves by crude exporters Russia and Kazakhstan and underscored the pressure that low prices are exerting on the public finances of oil-dependent countries in the former Soviet Union.

In February, the central bank had allowed the manat to fall 33.5% against the dollar and 30% against the euro after abandoning a dollar peg and adopting a dollar-euro basket to manage the exchange rate.