Page 45 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.73, # 1, 2016, pp. 45-51

AZERBAIJAN ECONOMY IN 2015: NEW OPPORTUNITIES FOR
FURTHER DIVERSIFICATION

V.Bayramov
Ph.D., UNEC
Email: [email protected] Tel: (012) 5970691

Received 25 January 2016; accepted 10 June 2016; published online 30 June 2016

Abstract
The main objective of this research is to analysis the state of the economy of the
Republic of Azerbaijan in 2015 and to define opportunities for further liberalization
reforms. The paper concludes that 2015 was not easy for Azerbaijan economy due to
sharp decline of crude oil price in the world market. The economic challenges,
however, should be as an opportunity for Azerbaijan to promote economic
diversification.

Key words: diversification, trade, exchange rate, economy, finance, development

JEL classification: L25

In 2015, the expansion of the US economy accompanied with improved
employment rates led the FED to switch to contractionary monetary policy. On the
other hand, the second largest economic power-China encountered a lower long-
term economic growth rate with a fall in exports, and thereby adversely affecting
global economic activity. Moreover, the rapid decline of prices in global fuel
markets, owing to fundamental and political reasons, resulted in an economic
downturn in countries reliant on their fuel exports, while importers experienced a
higher economic activity in parallel with lower inflation expectations.
Possessing large oil revenues gives the Government of Azerbaijan a unique
opportunity to effectively use this newfound wealth by investing in development
programs that can provide a lasting benefit to its citizens‘ social welfare, economic
growth, security, and overall quality of life. Given that the flow of oil revenues has
become a major source of income, the Government of Azerbaijan is recommended
to implement a long-term macroeconomic strategy, fiscal rule and implementation
mechanisms that ensure that the oil money is saved in the most efficient way and
that the benefits of the investments address high priority needs, are highly
integrated, and sustainable.

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