The CAREC Institute Considers That Azerbaijan Is One of the Countries with the Highest Recovery Rate after the Covid-19 Pandemic

The CAREC Institute Considers That Azerbaijan Is One of the Countries with the Highest Recovery Rate after the Covid-19 Pandemic

Comments by the Analyst of
the Center for Analysis of Economic Reforms and Communication Ayhan Satiji
on the Economic development of Azerbaijan

The Central Asian Regional Economic Cooperation (CAREC) has presented its quarterly economic monitor. The study of 11 countries of the CAREC region analyzed the latest components of economic development, taking into account such factors as gross domestic product (GDP), fiscal and monetary policy, and demonstrated regional indicators of recovery from the Covid-19 pandemic.

The economic downturn caused by the Covid-19 pandemic has begun to decline, and 2021 statistics reflect economic recovery. Thus, GDP levels were 2.8% higher in the first and 2.2% higher in the second quarter of 2021 at constant prices than in the corresponding periods of 2019. Azerbaijan, the PRC, and Uzbekistan reached higher real GDP than two years before. For the other CAREC economies, outcomes are still more volatile, but all of them reached positive seasonally-adjusted quarter-on-quarter growth in the 1st and 2nd quarters of 2021. The recovery has been led by agriculture, manufacturing, and services.

Besides, in the second quarter of 2021, Azerbaijan, the PRC, Georgia, Kazakhstan, and Kyrgyzstan achieved the highest real GDP growth in the last 4 years.

It is also a fact that during the pandemic, many economies, including the CAREC region, faced inflation. Between January 2021 and July 2021, inflation rose from 3.3% to 5.2% in Azerbaijan, from 2.8% to 11.9% in Georgia, from 7.4% to 8.4% in Kazakhstan, from 10.1% to 14.6% in the Kyrgyz Republic, and from 2.4% to 7.4% in Mongolia. Reviewing the inflation indicators, we can see that inflation in the CAREC region was low and the Azerbaijani economy had the lowest inflation growth rate during this period.

Source: Author's calculations based on CAREC quarterly economic monitoring data

One of the factors causing inflation was the negative impact of the pandemic impact on the food supply chain and the rise in food prices in early 2020. However, this impact decreased during the last quarter of 2020 and the second quarter of 2021. Thus, inflation in the food sector moderated in Georgia from 6.1% to 5.0%, in Pakistan from 15.0% to 13.7%, in Kazakhstan from 10.9% to 9.9%, in Tajikistan from 12.6% to 9.4%, and in Uzbekistan from 16.2% to 14.2%

However, this figure was around 4.9% in Azerbaijan in the corresponding period. Compared to other countries in the region, Azerbaijan's economy has one of the lowest inflation rates in food price inflation.

To conclude, in June 2021, exports statistics were 31% higher than the year before. The report notes that Azerbaijan was one of the countries demonstrating high export rates in the region.