The Socio-Economic Impact of Keeping Azerbaijan’s Land and Sea Borders Closed

Since March 2020, Azerbaijan's land and sea borders with Russia, Iran, and Georgia have remained closed. Every three months, the special quarantine regime has been extended, and the borders have not reopened so far. The most recent extension occurred on September 25, 2024, when the Cabinet of Ministers of Azerbaijan issued Decree No. 440[1], extending the special quarantine regime until January 1, 2025, to prevent the spread of COVID-19 and its potential consequences, despite the World Health Organization (WHO) announcing the end of the pandemic on May 5, 2023, after the virus claimed 69 million lives globally[2].

Azerbaijan's oil and gas sector accounted for only one-third of the country's gross domestic product (GDP) during January-September, but showed modest growth (close to 1%) due to high global oil prices in the third quarter of this year, despite declining oil production in the country.

Diversification, which has long been crucial for Azerbaijan's economy, is even more relevant in the current situation. However, without a competitive environment, a diversification policy implemented through the state's administrative and financial resources cannot ensure sustainable development in the medium and long term. Such policies, while having short-term effects, primarily serve to strengthen the dominance of more monopolistic companies.

In recent years, Azerbaijan has not only lagged behind the European and Central Asian regional indicators in terms of economic growth levels but also fell behind the average GDP growth rate of developing countries. The economic analysis and forecasts from the United Nations Department of Economic and Social Affairs indicate that in Least Developed Countries (LDCs), economic growth is expected to rise to as much as 4.8 percent in 2024 compared to the previous year. In LDCs, the average GDP growth in 2023 was 4.2 percent. For landlocked developing countries (LLDCs), a GDP growth of 4.7 percent is anticipated in 2024, which is close to the level recorded in 2023[1].