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Thursday,
August 9,
2007, #151 (1418)  Azerbaijan
economy relies completely on oil revenue
The oil boom in Azerbaijan is largely responsible for its massive GDP growth over the last two years, writes the news agency Regnum, putting it among leading countries in terms of economic development. However, the European Bank for Reconstruction and Development (EBRD) has warned that reliance on the oil industry causes structural imbalance and is not good for microeconomic development. That the economy is largely based on the oil industry also means that it is vulnerable to oil price fluctuations. At the end of 2006 inflation in Azerbaijan had increased to 11.4 percent; by March 2007 it reached 16 percent. There are worries that a huge flow of hard currency into the country will harm its economy. The EBRD report
highlighted problems of diversifying the economy in Azerbaijan, including
the high level of corruption, and complicated taxation and customs systems
which hinder development in other sectors. Low foreign investments in
the non-oil sector are also a problem, they said.
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