Economy—overview: Azerbaijan is less developed industrially than either Armenia or Georgia the other Transcaucasian states. It resembles the Central Asian states in its majority nominally Muslim population high structural unemployment and low standard of living. The economy's most prominent products are oil cotton and gas. Production from the Caspian oil and gas field has been in decline for several years but the negotiation of more than a dozen production-sharing arrangements (PSAs) with foreign firms which have thus far committed $30 billion to oil field development should generate the funds needed to spur future industrial development. Oil production under the first of these PSAs with the Azerbaijan International Operating Company began in November 1997. Azerbaijan shares all the formidable problems of the ex-Soviet republics in making the transition from a command to a market economy but its considerable energy resources brighten its long-term prospects. Baku has only recently begun making progress on economic reform and old economic ties and structures are slowly being replaced. A major short-term obstacle to economic progress including stepped up foreign investment is the continuing conflict with Armenia over the ethnic Armenian-dominated region of Nagorno-Karabakh. Trade with Russia and the other former Soviet republics is declining in importance while trade is building up with the nations of Europe Turkey Iran and the UAE. A serious long-term challenge is the maintenance of the competitiveness of non-oil exports in world markets.

GDP: purchasing power parity—$11.9 billion (1997 est.)

GDP—real growth rate: 5.8% (1997 est.)

GDP—per capita: purchasing power parity—$1 460 (1997 est.)

GDP—composition by sector:
agriculture: 30%
industry: 23%
services: 47% (1996 est.)

Inflation rate—consumer price index: 3.7% (1997 est.)

Labor force:
total: 2.789 million
by occupation: agriculture and forestry 32% industry and construction 26% other 42% (1990)

Unemployment rate: 20% (1996 est.)

Budget:
revenues: $565 million
expenditures: $682 million including capital expenditures of $NA (1996 est.)

Industries: petroleum and natural gas petroleum products oilfield equipment; steel iron ore cement; chemicals and petrochemicals; textiles

Industrial production growth rate: 0.3% (1997 est.)

Electricity—capacity: 5.239 million kW (1995)

Electricity—production: 16.051 billion kWh (1995)

Electricity—consumption per capita: 2 200 kWh (1996 est.)

Agriculture—products: cotton grain rice grapes fruit vegetables tea tobacco; cattle pigs sheep goats

Exports:
total value: $789 million (f.o.b. 1996 est.)
commodities: oil and gas chemicals oilfield equipment textiles cotton
partners: CIS European countries Turkey

Imports:
total value: $1.3 billion (c.i.f. 1996 est.)
commodities: machinery and parts consumer durables foodstuffs textiles
partners: CIS European countries Turkey

Debt—external: $100 million (of which $75 million to Russia)

Economic aid:
recipient: ODA $14 million (1993)
note: commitments 1992-95 $1 000 million ($185 million in disbursements); wheat from Turkey

Currency: 1 manat = 100 gopik

Exchange rates: manats per US$1—3 936.00 (September 1997) 4 301.26 (1996) 4 413.54 (1995) 1 570.23 (1994) 99.98 (1993)

Fiscal year: calendar year