Economy

Azerbaijan has substantial oil reserves and a significant agronomic potential based on a wide variety of climatic zones. Since 1995, in cooperation with the IMF, Azerbaijan has pursued a highly successful economic stabilization program, which has brought inflation down from 1,800% in 1994 to 1.8% in 2000. The national currency, the Azerbaijani manat, was stable in 2000, depreciating 3.8% against the dollar. The budget deficit equalled a modest 1.3% of GDP in 2000.

Azerbaijan has a highly dynamic economy, mainly because of oil, and its annual gross domestic product (GDP) growth soared 34.5% to reach $20.6 billion in 2006, making it the fastest growing economy in the world for the second-year. GDP per capita rose 33% to US$2,373. The 2007 GDP growth forecast ranges from 18% by the Economist Intelligence Unit to 22% by the Asian Development Bank.

Progress on economic reform has generally lagged behind macroeconomic stabilization. The government has undertaken regulatory reforms in some areas, including substantial opening of trade policy, but inefficient public administration in which commercial and regulatory interests are co-mingled limit the impact of these reforms. The government has largely completed privatisation of agricultural lands and small and medium-sized enterprises. In August 2000, the government launched a second-stage privatisation program, in which many large state enterprises will be privatised.

Industry

Azerbaijan's economy is largely based on industry. Industries include machine manufacture, petroleum and other mining, petroleum refining, textile production, and chemical processing.

Agriculture

Agriculture accounts for one-third of Azerbaijan's economy. Most of the nation's farms are irrigated. In the lowlands, farmers grow such crops as cotton, fruit, grain, tea, tobacco, and many types of vegetables. Silkworms are raised for the production of natural silk for the clothing industry. Azerbaijan's herders raise cattle, domestic sheep and goats near the mountain ranges. Seafood, including caviar and fish are obtained from the nearby Caspian Sea.