Successfully investing in Azerbaijan

Jun 25,2020

How do you assess the current economic situation in Azerbaijan? Azerbaijan has very large oil and natural gas deposits, which are located below the Caspian Sea. For this reason, the economic situation in Azerbaijan is very much dependent on the development of the oil price. Economic growth of 1.4 per cent was recorded in Azerbaijan in 2018. The economy grew by 2.2 per cent in 2019 and an economic growth of 2.4 per cent was expected for 2020. On a positive note, the non-oil sector was the main contributor to economic growth in 2019. How would you describe the investment climate in Azerbaijan? Which sectors offer the largest potential? The investment climate in Azerbaijan is good. In the international ranking “Doing Business 2020” Azerbaijan ranks 34th out of 190 countries, which are examined for their economic friendliness. Azerbaijan received a particularly positive rating in the categories of business creation and loan maintenance. As is well known, the economy of Azerbaijan is focused on oil and gas production and processing of these raw materials. Nevertheless, the Azerbaijan government has set itself the goal to diversify its economy in the next few years. Above all, the non-energy sectors are to be developed and the infrastructure is to be expanded. Above all, the government of Azerbaijan wants to focus more on the development of the following industries: Agriculture; Logistics; Tourism; Environmental engineering; IT sector; Transport E-commerce. All of these sectors offer very good investment opportunities and great potential for foreign investors. What challenges do German companies face during their business ventures into Azerbaijan? Foreign investors mostly complain in Azerbaijan about the still dominant monopoly economy, the bureaucracy in the authorities and the still relatively high level of corruption that affects normal business processes. Nevertheless, the situation in these areas unfortunately does not improve as quickly as would be desirable. For Germany, Azerbaijan is the most important economic partner in the Caucasus. What importance does Germany have for Azerbaijan? Germany is one of Azerbaijan´s most important trading partners. Germany mainly exports machines, motor vehicles, automotive parts and chemical products to the country. Azerbaijan mainly exports oil to Germany. In 2019, German exports to Azerbaijan increased by 1.4 per cent. The sales volume was 440 mio. Euros. Oil imports decreased by 6.5 per cent in 2019 and amounted to 1.3 billion Euros. In your opinion, how will Azerbaijan develop? Given the low oil and gas prices as well as the corona pandemic and the associated lockdown, it is very difficult to make binding statements as to how Azerbaijan will develop in 2020. In the long term, however, Azerbaijan will remain an interesting location with lots of resources, good infrastructure and an important geopolitical location.

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