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Azerbaijan Weekly Market Watch

Azerbaijan Weekly Market Watch

Galt&Taggart Publishes Report on Main Developments that Took Place in Azerbaijani Economy Last Week:

GDP down 3.8% y/y in 2016 Azerbaijan’s economy contracted 3.8% y/y in 2016, driven mainly by a 27.6% y/y decline in construction activity. Positive contribution to growth came from agriculture (+2.6% y/y), information and communication (+4.5% y/y), trade (+1.5% y/y), industry (+0.4% y/y), and tourism (+0.1% y/y).

GDP per capita down 29.9% y/y to US$ 3,897 Nominal GDP in Azerbaijan in AZN terms was up 10.4% y/y in 2016. Nominal growth in GDP was driven by a 23.4% y/y increase in oil GDP, while non-oil GDP was up 4.6% y/y. In nominal US$ terms, however, GDP in 2016 was down 28.9% y/y to US$ 37.6bn. GDP per capita was down 29.9% y/y to US$ 3,897.

Inflation rate at 15.5% y/y in December 2016 Annual CPI inflation rate retreated from 17.1% in the previous month to 15.5% in December 2016. In December, food prices were up 21.0% y/y (-0.5ppts m/m), non-food prices were up 16.3% y/y (- 5.6ppts m/m), and service sector prices were up 8.0% y/y (+0.5ppts m/m). Overall, annual average inflation was 12.4% y/y in 2016, up from 4.0% y/y in 2015. Food prices were up 14.8% y/y, nonfood prices were up 16.8% y/y, while prices in services were up 5.6% y/y.

Non-mineral fuel exports down 8.6% y/y in December 2016 Azerbaijan’s exports declined 8.8% y/y in November 2016 to US$ 1.0bn, while imports were up 0.5% y/y to US$ 0.8bn, resulting in a US$ 0.3bn trade surplus (-26.8% y/y). According to preliminary December 2016 data from the Customs Committee, non-mineral fuel (N-MF) exports were down 8.6% y/y to US$ 105.3mn, while total imports were down 19.0% y/y to US$ 771.6mn. According to the preliminary figures, N-MF exports were down 24.2% y/y in 2016 to US$ 1.2bn, while total imports were down 7.4% y/y to US$ 8.5bn

Oil price: Brent oil price was down 0.1% w/w to US$ 55.4/bbl (up 98.6.9% y/y), while WTI oil price increased 0.2% w/w to US$ 52.5/bbl (up 97.6.8% y/y). In AZN terms, Brent oil price was up 1.5% w/w to AZN 97.9 (up 130.9% y/y).  Exchange rate: On January 19, 2016, Central Bank’s AZN/US$ rate was 1.8311 (+2.5% w/w) and AZN/EUR rate was 1.9483 (+2.7% w/w). At Bloomberg AZN/US$ was trading at 1.8663 (+1.7% w/w) while AZN/EUR was trading at 1.9978 (+2.7% w/w).

Monetary policy rate: Monetary policy rate was unchanged at 15.0%. Corporate Eurobonds: State Oil Company of Azerbaijan (SOCAR) Eurobond (SOIAZ 03/30) closed at 6.3% yield, trading at 105.9 (-0.4% w/w). International Bank of Azerbaijan Eurobonds (IBAZAZ 06/19) were trading at 100.3 (+0.1% w/w), yielding 5.5%. Azerbaijan Sovereign Eurobonds (AZERBJ 03/24) closed at 100.2 (-0.7% w/w) at 4.7% yield to maturity.