Even in 2009 - despite the difficult international economic situation - Azerbaijani economy has continued to grow, although at a lower pace than in previous years (+26, 2% in 2005, +34.5% in 2006, +25% in 2007, +10.8% in 2008). According to State Statistics Committee in fact, GDP grew at the beginning of this year by 4.1%, reaching, in monetary terms, an amount equal to about 50 billion dollars. In addition to the slowdown in growth there is a decrease in inflationary pressure. At the beginning of the year, there is a deflationary phenomenon due mainly to the decrease in domestic demand. The Azerbaijani economy is driven by the energy sector, which provides over 80% of export revenues and 36% of tax revenues. Since 1994, the Azeri government has signed 21 contracts for exploration, development and production of hydrocarbons, based on Production Sharing Agreements that allow the Government to remain owner of the reserves and to share exploration costs and sale revenues. As far as oil is concerned, the potential output of the Country is currently equal to about 1 million barrels a day. In regard to gas, the transition to the operational phase of the Shah-Deniz 2 Field will enable Azerbaijan to produce over 16 billion cubic meters of gas a year. The project has still two open questions: the first is connected with the large investment (about 20 billion dollars) needed to extract the gas, the second concerns the outcome - still uncertain - of the ongoing negotiations with Turkey for the definition of transit fees for gas that will be exported. In order to mitigate the risks of an excessive dependence on the energy sector, the Authorities are trying to diversify the national economy. However, the results are still far from reaching. This is also due to the difficulty of contrasting the income position acquired by some local monopolies. Moreover, the entrance of Azerbaijan in the WTO (an objective pursued by the Government for over ten years) is instrumental in reducing the dependence on energy resources. The current negotiation is further complicated by the request of Baku to be admitted to the Organization of Geneva with the status of Developing Country, in order to obtain a more favorable treatment and the possibility of supporting some sectors of the national economy – thus protecting them from international competition. The agricultural sector plays an important role in both the economy and the society of Azerbaijan (1/3 of the national workforce and the second richest sector after oil). The main agricultural resources are: cotton, wheat, grapes, dried fruits, citrus, vegetables, oil, tea and tobacco, while cattle, sheep and - to a lesser extent - swine breeding is widespread. In the first 8 months of 2009, the agricultural sector accounted for approximately 6.3% of GDP, continuing the trend of development of rural areas started in 1999, when the reform that allowed applicants to become owners of small plots was passed. Construction and Services sectors (hotel and telecommunications) contribute significantly to the overall growth, benefiting from the incomes of exports of energy. The local currency, the new Azerbaijani Manat (AZN) is connected (though not officially) to the U.S. dollar. Thanks also to the intervention of the Central Bank, the Manat has maintained a stable rate in recent months, despite the sharp decline of revenues in valuable currency caused by the contraction of oil prices. Among the factors that prevent further a growth of the Azerbaijani economy there are: the unresolved territorial issue of Nagorno-Karabakh due to the long dispute with Armenia (with which Azerbaijan has not diplomatic relations and with which exists since 1994 a cease-fire agreement), instability in neighbouring Georgia, a country through which the pipeline "BTC" passes, and proximity to the Russian regions of Dagestan and Chechnya, involved in widespread phenomena of crime and in recurrent terrorism acts. Domestically, the consolidation of a truly competitive system is seriously affected by the opacity of the entire economy and of the administration of justice.
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