The economic crisis in Russia to inevitably affect Azerbaijan

The increasing economic crisis in Russia cannot exert influence on Azerbaijan, because this country is home to about 2.5 million Azerbaijanis, and this is neither more nor less than 28 percent of the population of Azerbaijan. Approximately 600 thousand are in the territory of Russia temporarily, i.e. for earnings. According to the Federal Migration Service of Russia, Azerbaijan is on the 5th place in the number of migrants in Russia after Ukraine, Uzbekistan, Tajikistan and Kyrgyzstan.

According to the Russian financial crisis of 2008, the worsening economic situation will affect the volume of money transfers from Russia to Azerbaijan. Since 2009, remittances to Azerbaijan compared to 2008 decreased by 20%. This was due both to the outflow of migrant workers, and the decreasing number of new arrivals. So in January 2009 the entry of migrant workers in Russia decreased by 10 percent compared to January 2008. And the return of the migrants, most of which are not skilled workers, will cause problems in the labor market of Azerbaijan. Today in Azerbaijan on official statistics unemployed are 5 percent, according to unofficial data about a third of the workforce. According to estimates of the International Labor Organization in 2014, unemployment in Azerbaijan will reach 5.8%, and in 2018 - 6.2%.

Russia among other things is a traditional trade partner of Azerbaijan. During the crisis of 2009 the trade between Azerbaijan and Russia decreased by 7.1%, including imports by 20%. According to the State Customs Committee, for Azerbaijan, the major exporter is Russia. So in 2013 the total volume of imports from Russia amounted to 1.5 billion dollars. The main items in the imports are machines, devices and metallurgy. These areas are the most vulnerable in times of crisis and are already feeling its impact. But the fundamental difference between the crisis of 2008 and 2014 is that the worsening economic situation comes amid the international isolation of Russia in response to the annexation of the Crimea. There might be the collapse of oil prices, which is a major source of Russia’s fiscal revenue, and freezing Russian assets. That could push Russia to isolation, the first symptoms of which have already become the intensification of work to create its own payment system, and the refusal of the largest financial institution Bank of Russia from foreign currency operations and transition to work exclusively with the Russian ruble. Russia's losses in the European market will force it to tighten its work to extend the Customs Union and to strengthen its expansion in the CIS market. We should take into account that Russia has more than enough leverage over Azerbaijan. -15D -