WB: Growing Trade with Russia Weakened Economy of Azerbaijan

Azerbaijan, like other countries of the South Caucasus and the European part of the CIS this year is experiencing economic decline on the background of dependence on trade with Russia.

According to the World Bank report "Low commodity prices and weak currencies," the negative is associated with lower oil prices, the decline in remittances and the volume of trade transactions. As a result, at the end of 2015 the pace of growth in these countries will be at 50% against last year. With the reduction in business activity the output will decline by 0.9%. However, the most significant drop is precisely in Russia (minus 3.8%).

In the oil exporting countries (Azerbaijan, Kazakhstan and Russia) and the countries receiving remittances from abroad (Armenia, Tajikistan) poor households suffer most of all. The reason is the increase in import prices caused by the depreciation of the national currency, and the reduction of jobs outside the budget, trade and services sector.

To gain competitiveness in world markets for these countries it is necessary to adjust exchange rates, coupled with prudent monetary policy designed to keep domestic inflation under control. In addition, not verbal, but real reforms should be activated. --17D-