A breakthrough in the Azerbaijani economy or a crisis...

Azerbaijan's economy has seen a remarkable acceleration in growth, with the pace of expansion soaring from 1.1 to 5 percent over the past month, according to data released by the State Statistics Committee (SSC).

The SSC highlighted that in January 2024, the country's Gross Domestic Product (GDP) reached 9 billion 131 million Manats, marking a robust 5 percent increase compared to the same period last year. Notably, this surge in economic activity was predominantly driven by the non-oil and gas sector, which witnessed a significant uptick of 12.3 percent.

The Ministry Of Economy reported a contrasting trend in the oil and gas sector, where the value added decreased by 2.6 percent. However, buoyed by high investment activity, particularly in infrastructure projects and non-oil industries, the non-oil and gas sector exhibited resilience, reflecting a 34.1 percent increase in investments in fixed assets compared to January of the previous year.

Rufat Guliyev, a member of the Committee on Economic Policy, Industry and Entrepreneurship of the Milli Majlis, cautiously welcomed the positive indicators in a comment for Turan, but stressed the need for a comprehensive assessment of the dynamics over the year. Guliyev attributed the January surge to the lingering impact of 2023 and emphasized the country's strategic shift towards bolstering the non-oil sector, anticipating it to play an increasingly dominant role in budget revenues.

However, economists voiced a note of caution amidst the upbeat data. Rashad Hasanov highlighted the limited scope of the available data while acknowledging the tourism sector's contribution to the January surge, driven by an influx of visitors. Hasanov noted that while the non-oil sector's growth offers some respite, sustained economic progress hinges on radical reforms to address institutional challenges.

Conversely, economist Zohrab Ismail expressed skepticism in a commentary for Radio Azadlig, viewing the current growth trajectory as unsustainable. Ismail warned of an impending crisis, attributing the apparent growth in the non-oil sector to inflated prices rather than genuine economic expansion. He underscored the fundamental weaknesses stemming from the economy's oil dependency and cautioned against overreliance on short-term gains from infrastructure projects in recently liberated territories.