In January of this year, the value of the total export of Azerbaijan was 1.8 billion US dollars, including the value of exports in the non-oil sector was 222 million US dollars. Compared to the same period of last year, exports in the non-oil sector decreased by 22 percent.
This is reported by the Center for Analysis and Communication of Economic Reforms. Such a serious decrease in the export of the non-oil sector should, of course, cause concern. But what are the reasons for this decline?
Seasonal factors
According to Vugar Bayramov, a member of the Economic policy, industry and entrepreneurship committee of the Milli Majlis, the noted decrease is a monthly indicator: “It is important to look at more half-yearly and annual periods to draw conclusions. The monthly decrease is mostly due to seasonal factors. Seasonal factors affect the volume of non-oil exports in certain months. We should also take into account that the level of inflation observed in the region in previous years affected the value of total non-oil exports.
We saw a ten percent increase last year
According to the MP, increasing non-oil exports is very important for our country: “Increasing non-oil exports in Azerbaijan is one of the main priorities. Because by 2026, it is aimed to increase the volume of non-oil exports to 5 billion dollars. Also, non-oil exports create the basis for more foreign currency to enter our country. At the end of 2023, we observed a nearly 10 percent increase in non-oil exports. A significant part of the funds received from exports to Azerbaijan falls on the share of the oil sector. In this regard, increasing non-oil exports is very important. The main goal in the export of non-oil products is to achieve annual growth. In particular, we should take into account that a part of non-oil exports are agricultural products. Therefore, I think that we will observe increases in this direction from March.”
International standards should be applied
V. Bayramov stated that it is necessary to take certain steps for the development of this sector: “There is a need to apply international standards to increase non-oil exports. Entrepreneurs working in the agricultural sector in Azerbaijan experience certain difficulties in exporting precisely because the standards are not fully applied. In particular, we should take into account that approximately 60 percent of Azerbaijan’s non-oil exports are shared by two countries. Implementation of standards is also important in terms of diversification of non-oil export markets. Accelerating membership in the World Trade Organization is desirable. This is not only the domestic market, but also new opportunities in terms of exports. At the same time, minimization of export barriers can lead to the expansion of export opportunities for entrepreneurs working in the non-oil sector.”
Vertical rather than horizontal diversification
Economist Rashad Hasanov thinks that the decrease occurred in non-food industry products: “This category mainly includes electricity, mining industry, as well as polymer-containing products. I think this is not a chronic condition. It can also be caused by a technical defect observed in the operation of a certain enterprise. At the same time, it is possible to see the decrease in the demand for the products of some enterprise from the importing country as a reason. Or the delay of the order will lead to a decrease in cases.”
R. Hasanov said that there are few opportunities in this field: “If this reduction will be repeated in the next periods and months, of course, this is already a worrying moment. There is no large base for diversification of non-oil exports. In recent times, agricultural and food industry products, products produced in special economic zones created in industrial parks, and goods produced from products using oil as raw material are being exported. These circumstances show us that the possibility of forming a large economic export base in the medium and long term is low. In this direction, not horizontal, but vertical diversification is observed, and efforts are being made to achieve results in this area by diversifying the oil industry to a certain extent.”
We should join foreign economic blocs
According to the expert, if this continues, there may be a danger to our economy: “A decrease in Azerbaijan’s non-oil exports is not desirable. Because this reduction can have quite big consequences. Especially if we take into account that the prices in the hydrocarbon market are not stable and the figures are formed beyond the will of Azerbaijan. This makes the country’s economy open to foreign attacks. In connection with the restoration of territories freed from occupation, state spending has also increased. Under such conditions, fundamental reforms in our economy are needed. The economy should be opened and liberalized. Azerbaijan should join foreign economic blocs. It should become one of the attractive countries for foreign investment.” (“Kaspi” newspaper)
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