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Nigar Hasanova

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Azerbaijan has the potential to elevate its annual exports to over 1 billion US dollars within the next five years. This outlook was articulated by Vladanka Andreyeva, the resident coordinator of the UN in Azerbaijan, during an event on Non-tariff Barriers in Trade held in Baku. She highlighted the steady growth in Azerbaijan's exports over the past years, reaching 35 billion US dollars in 2022, with non-mineral exports doubling within the last five years.

In the context of this optimistic forecast, economist Vugar Bayramov shared his insights with Azernews on Azerbaijan's export dynamics. Over the past five years, both oil and non-oil exports in Azerbaijan have witnessed a surge. He mentioned that the non-oil sector has experienced consistent growth, surpassing three billion dollars for the second consecutive year. In the first 11 months of 2023 alone, non-oil exports recorded an impressive nearly 11% increase, building on the previous year's growth rate of more than 20%.

Bayramov emphasized the key role played by increased export opportunities to neighboring countries, particularly Russia and Turkiye, in the upswing of non-oil exports. The diversification of exports, extending beyond food products to non-food items, has also significantly contributed to this positive trend. Azerbaijan is now exporting non-food products to European and Latin American countries, marking a notable expansion in its global reach.

“One of the main reasons for this is the increase in the export opportunities of the products produced in Azerbaijan, to the markets of neighboring countries, especially to the markets of Russia and Turkiye, and the increase in demand in those countries, which ultimately affected non-oil exports. The second point is the formation of exports of not only food but also non-food products. Azerbaijan now exports non-food products not only to neighboring countries but also to some European and Latin American countries. This, of course, is one of the main reasons for the increase in non-oil exports,” he added.

Expert noted that the agricultural sector continues to be a leading part of non-resource exports, constituting almost 40% of the annual exports exceeding 3 billion dollars. Noteworthy is the increase in the export of products from the Sumgayit Industrial Park, including fertilizers, reflecting an evolving structure in non-resource exports toward quality processed products. This transformation has propelled Azerbaijan to include a European country, Switzerland, in the top five non-oil exports, showcasing the introduction of qualitatively new non-resource products to the global market.

Regarding the potential of reaching the numbers in non–oil exports previously mentioned by the UN Resident Coordinator in Azerbaijan, expert underlined the untapped potential for further growth in non-oil exports, surpassing the targets outlined in the social-economic development strategy covering 2022-2026.

“There is a greater potential. In the social economic development strategy covering the years 2022-2026, increasing non-resource exports is defined as a target, but our assessment shows that the potential is more. In other words, after the pandemic, Azerbaijan's non-oil exports have increased by more than one billion dollars. So this increase also creates the possibility that in the new years, especially in the next five years, it is possible to achieve an increase in non-resource exports of practically one billion more. From that point of view, of course, the potential is huge, because, on the one hand, the expansion of the agricultural sector, on the other hand, the expansion of the export geography of processing products ultimately allows us to achieve the export of non-resource products even more than the goals defined in the social economic development strategy,” he highlighted.

Identifying challenges, Bayramov stressed the importance of meeting international standards, particularly those set by the World Trade Organization, to facilitate the diversification of markets. He underscored that about 90% of Azerbaijan's agricultural and food products are exported to a single country, emphasizing the need to explore new markets, including the European Union and Gulf countries.

“If we group the problems and obstacles, of course, here is the expectation of standards, especially in food products, because one of the most important points is the diversification of markets. About 90 percent of Azerbaijan's agricultural products and food products are exported to one country. The goal is to enter more markets, including the European Union markets, and the Gulf countries market, and thereby diversify the export markets as a whole. From that point of view, it is very important to study and apply international standards, especially World Trade Organization standards. One of the main factors and barriers affecting non-oil exports is precisely the fact that these standards are not fully implemented by companies.”

Expert also advocated for the implementation of tax incentives, especially along the value chain, to encourage the sale of processed agricultural products. Additionally, he urged swift negotiations with the World Trade Organization to enhance Azerbaijan's membership, providing entrepreneurs in the non-oil sector access to markets of other member countries :

“Another important point is the need to expand the scope of tax incentives in the agricultural sector, especially according to the value chain, so that farmers sell agricultural products processed and not in raw form. Therefore, it is very important to pay attention to the value chain unambiguously when applying tax incentives. It would be appropriate to accelerate negotiations with the World Trade Organization and intensify the issue of Azerbaijan's membership because the World Trade Organization is also an important tool for entrepreneurs working in the non-oil sector in Azerbaijan, as well as in terms of access to the market of other countries that are members of the WTO,” he concluded.

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