Azerbaijan's economic development outlook in post COVID-19 era

Alat Free Economic Zone in Azerbaijan / Courtesy of Embassy of Azerbaijan in Korea

Ambassador shares Azerbaijan's economic panorama

By Ramin Hasanov

Azerbaijan continues its efforts in economic diversification, non-oil sector development, the further promotion of equal progress of the country's regions, increasing national economic competitiveness and efficient integration into global supply chains.

Ramin Hasanov

In the context of non-oil sector development, Azerbaijan focuses particularly on information-communication technologies, the chemical industry, the light industry, transport and logistics, agriculture, food processing, renewable energies and tourism. With the aim of fully realizing the untapped potential in the non-energy sector, various support mechanisms are being implemented to stimulate production, improve the export structure, foster export-led growth and promote the Made in Azerbaijan brand.

The government's timely response to COVID-19 enabled the national economy to swiftly adapt to the new global context, secure macroeconomic stability and efficiently handle the effects of the crisis.

In 2022, Azerbaijan has continued to successfully implement the Azerbaijan 2030: National Priorities for Socio-Economic Development, Socioeconomic Development Strategy of the Republic of Azerbaijan for 2022 to 2026 and the State Program of socio-economic development of the regions of the Republic of Azerbaijan in 2019 to 2023, to ensure the country's smooth transition to a more diversified, competitive, innovative, sustainable, resilient, as well as technological, intellectual-property-based and knowledge-based economy.

The country's core priorities for socio-economic development include sustainably growing a competitive economy, a society based on dynamic, inclusive and social justice, competitive human capital and space for modern innovations, the "Great Return" to liberated territories, a clean environment and green growth country.

Despite the global economic crisis in 2022, real GDP grew by 4.6 percent and non-oil sector growth was recorded at 9.1 percent. This is a historic achievement for the country in the post-COVID-19 era. During the same period, the share of the non-oil and gas sector in GDP accounted for 47.8 percent. The state budget revenues rose by 16.2 percent compared to 2021. The country's strategic foreign currency reserves stood at $58.5 billion (76 trillion won) and constituted 74.4 percent of the GDP. Furthermore, the official currency reserves of the Central Bank increased by 27.1 percent, or $9 billion, compared to 2021.

The post-COVID-19 and post-conflict period of 2022 to 2030 ushers in a new and completely different strategic development phase for Azerbaijan. In this strategic period, Azerbaijan aspires to reach new heights in building a society of well-being through inclusive development by engaging state-of-the-art and sustainable growth drivers, placing a stronger emphasis on innovation and financial stability and global value chain integration and deploying a new generation of structural and institutional adjustment measures.

Foreign investment inflow promotion

In the face of turbulent times, the intensification of economic reforms remains a top priority for the country's development agenda, so as to further facilitate foreign trade, as well as improve the business and investment climate.

Consequently, a favorable economic and investment environment has been established in Azerbaijan, and significant measures have recently been realized to further improve the business climate so as to attract foreign investments ― various tax-related benefits and other government payments, the expansion of public-private partnerships and the provision of loans on preferential terms.

The potential investment areas include the chemical, metallurgical and energy industry, mechanical engineering and production of building materials, food and light industry, material and technical base of the agricultural sector, plant-growing, cattle-breeding, information-communication technologies and tourism.

Azerbaijan's economic zones, clusters

The Alat Free Economic Zone, as well as the industrial, high-tech and agri-parks operating in Azerbaijan, are aimed at boosting foreign investment in the non-oil sector, enhancing the country's export potential and international competitiveness, as well as promoting a digital economy. Furthermore, the economic zones and clusters will foster the country's production capabilities, strengthen Azerbaijan as an investment hub, ensure efficient integration into global value chains, promote the Made in Azerbaijan brand, as well as Make in Azerbaijan and Invest in Azerbaijan concepts.

Moreover, the Alat Free Economic Zone and Azerbaijan's industrial, high-tech and agri-parks, are the most appropriate sites for investment in the region. They offer a multitude of favorable business conditions and commercial advantages for foreign companies and investors. Thanks to these incentives, the number of residents of the country's clusters dynamically grows.

Korean investors are welcome to examine the investment opportunities in Azerbaijan, including in the country's liberated territories, which benefit from favorable transport and logistics opportunities, as well as explore tremendous advantages provided by the economic zones and clusters.

Ramin Hasanov is ambassador of Azerbaijan to Korea.