Oil prices changed specific weight of economy sectors in GDP

Baku. 6 January. REPORT.AZ/ Soaring oil prices facilitated development of industry sector in Azerbaijan since early 2000s. Report informs, specific weight of industry sector in GDP during 11 months of 2016 dropped to the level of 2002. Specific weight of industry sector in GDP changed in parallel with dynamics of oil prices. Below chart shows specific weight of basic sectors of Azerbaijan economy like industry, trade, construction, agriculture, transportation and communication, net taxes in GDP of the country.

As we see in the chart, the industry sector made up about 60% of GDP in 2008, when oil prices were rapidly climbing. Short term decline of oil prices after bankruptcy of Lehman Brothers in US reduced share of industry sector in GDP to 50%. Despite growth of industry sector during next years, it started to lose weight in the economy since 2012 and in 11 months of 2016 its specific weight in GDP dropped to 37%.

Decrease of share of industry sector during last 6 years was balanced by increase of that of construction sector. Figures reflecting long-standing development of construction sector weren’t so visible due to higher additional value created by industry sector. As you see on the chart, the specific weight of construction sector started to dwindle during last two years. Thus, it dropped from 12.5% in 2014 to 10.3% by the end of 2016.

Trade share in GDP rose from 6.3% to 10.7%. Low share of agriculture within GDP of the country attracts attention. Thus, specific weight of the sector in GDP in 2016 is reported at 5.4%, whereas it made up 6.2% according to summary of 2015. Notably, specific weight of agriculture sector in GDP was above 10% before 2004.

Report’s expert group notes that, if oil prices remain at this level, additional value contributed by above mentioned sectors to GDP will also remain unchanged. Industry sector will remain around 40%, trade -10%, construction - 10%, agriculture may slightly increase to 7-8%, transportation and communication will be around 7%, net taxes may also increase up to 10%. Trade and construction sectors develop depending on additional value created by industry sector.

Announcement of tight monetary policy by Central Bank of Azerbaijan (CBA) will slow down trade and construction sectors.