Azerbaijan's GDP: Growth or Manipulation?

Recent data from the State Statistics Committee (SSC) of Azerbaijan reports a 4.2% increase in the country's Gross Domestic Product (GDP) for the first five months of this year, reaching 48.026 million manats. However, a deeper analysis raises questions about the reliability of these figures, suggesting possible manipulation.

While the SSC's figures initially appear to indicate economic improvement, a comparison with last year's data paints a different picture. For the same period in 2023, GDP stood at 49,580.8 million manats. This indicates a 3% decline in GDP, contradicting claims of growth.

The oil and gas sector, traditionally the cornerstone of Azerbaijan's economy, has not shown growth compared to the same period in 2023. Instead, it has experienced a gradual decline of 2.5%. Conversely, the non-oil and gas sector expanded significantly, increasing by 7.3%.

This is not the first instance of discrepancies in Azerbaijan's GDP reports. The SCC announced a 4.3% growth for the first four months of 2024, which an audit later refuted, revealing an actual decrease of 4.5%. Economist Elchin Rashidov highlights these inconsistencies in  program "A Difficult Question," attributing the differences to the methodology used in calculating GDP.

Rashidov emphasizes the importance of transparency in measuring inflation, as it indirectly affects GDP. Despite this, detailed information on inflation remains unavailable. Rashidov points out that nominal GDP has decreased by about 4% compared to last year. Considering an inflation rate of 9%, the real economic downturn is approximately 13%.

Azerbaijan's population is growing by 1% annually. To maintain economic stability, GDP per capita must also grow by at least 1%. With the current economic indicators, it is evident that Azerbaijan's GDP per capita is not keeping pace with population growth, raising concerns about long-term economic stability.

The conflicting reports on Azerbaijan's GDP growth and the underlying economic realities highlight the need for greater transparency and accuracy in economic reporting. The significant decline in the oil and gas sector, coupled with an understated inflation impact, suggests that the country's economic situation may be more precarious than official figures indicate. As Azerbaijan navigates these challenges, ensuring accurate and transparent economic data will be crucial for informed policy-making and sustainable growth.