05.Feb .2023 16:17

The Week in the Region

The Week in the Region
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The closing of the month last week was quite busy, with national statistical centers and central banks of various countries publishing their updates. Trade, CPI, tourism, interest rates were mostly in the spotlight in Turkey, Azerbaijan and Armenia, with the Lachin corridor blockade still on the agenda in the latter country.


Armenia Central Bank has left refinancing rate unchanged. At its meeting of Jan 31, the Board of the Central Bank of Armenia decided to leave the refinancing rate unchanged at 10.75. The Lombard repo facility rate was set at 12.25%. The Deposit facility rate was set at 9.25%.

On the same day, Central Bank’s governor revealed the volume of deposits of non-residents at commercial banks of Armenia, the country which became one of the top destinations for Russians’ influx since the beginning of unprovoked war against Ukraine. According to Central Bank Governor Martin Galstyan, deposits in Armenia grew approximately 43%, with high growth being recorded in deposits of non-residents in 2022 – totaling 1 billion 287 million drams (US$ 3.2 mln).

Migration from Russia carried impact at the labor market as well. According to the deputy chairman of Armenian Central Bank Armen Nurbekyan, the number of highly-paid non-resident workers in Armenia was up by 7.5 thousand people in early January 2023, compared to a year ago.

The end of the month/s has been summirized at the publications of the National Statistical Committee (NSC).

Pursuant to NSC data, in 2022 electricity production in Armenia increased by 16.1% compared to the previous year to 8.9 billion kWh. “In the first nine months of 2022, thermal power plants accounted for 55.4% of the total electricity production, hydropower plants produced 23.3% of the total and the nuclear power plant accounted for 18.3%. Other generating facilities, wind and solar power plants, accounted for 3% of the total generation.”

Similar to electricity production, Armenia recorded a positive growth in foreign trade. Last year, Armenia’s foreign trade surged by 68.8% from the previous year to over $14.1 billion. Exports, compared to the same period in 2021, increased by 77.7%, to over $5.3 billion. Imports during the reporting period amounted to over $8.7 billion, recording an increase of 63.5% compared to January-December 2021.

14.2% growth was reached in Armenia's economic activity in 2022 as opposed to the previous year, news agency ARKA reported citing NSC.

The blockade of the Lachin Corridor, the lifeline road connecting Nagorno-Karabakh to Armenia has been remaining a paramount issue for the Prime Minister Nikol Pashinyan. However, contrary to the previous weeks, when Armenian officials used to hold talks with Western leaders, this week negotiations were conducted mostly with Russians.

On January 31, Prime Minister Pashinyan had a telephone conversation with the President of the Russian Federation Vladimir Putin. PM referred to the humanitarian crisis created in Nagorno-Karabakh as a result of Azerbaijan’s illegal blockade of the Lachin Corridor and highlighted the importance of implementation of the necessary steps by Russia to overcome it.

In this context, reference was made to the activities of the Russian peacekeeping mission in Nagorno-Karabakh, Armradio reported.

Later, on Feb 3, Pashinyan met with Russian Prime Minister Mikhail Mishustin on the sidelines of an Eurasian Economic Union (EEU) gathering in Kazakhstan. ‘The Russian Federation is the key partner of Armenia in the field of security and, unfortunately, the situation is not so good with us in the field of security,’ Pashinyan told Mishustin, ARKA news agency reported with reference to the Armenian government press office.

On 12 December 2022, citizens of Azerbaijan claiming to be "eco-activists" launched a blockade of the Lachin corridor, the only road connecting Artsakh (Nagorno Karabakh) to the outside world and to Armenia. Azerbaijanis claim to have peaceful intentions, in a meantime, Armenian side says that their blockade is causing severe consequences for the population; importation of food, fuel, and medicine is blocked, and the 120,000 residents of the region are trapped, creating a humanitarian crisis.


The Management Board (MB) of the Central Bank of Azerbaijan (CBA) on February 1, made a decision to raise the discount rate by 0.25 percentage points to 8.5%. The interest rate floor was increased by 0.5% to 6.75% and the ceiling is increased by 0.25% to 9.5%.

Last week, CBA announced about growth of the foreign exchange reserves which amounted to $9.061 billion. “This is 0.7% more than on January 1. The CBA’s foreign exchange reserves increased by 28.1% over the past year,” news agency Report stated with reference to CBA.

The Bank updated forecasts on annual inflation in Azerbaijan, which is expected to be around 8% in 2023 “if the assumptions of the base scenario remain stable.”

Azerbaijan has “natural gas reserves, which will be enough for us and our partners for at least 100 years,” said President Ilham Aliyev as he addressed the 9th Southern Gas Corridor Advisory Council Ministerial Meeting and the 1st Green Energy Advisory Council Ministerial meeting held in Baku.

During the same conference, President Aliyev announced that his country plans to double gas export to Europe by 2027.

“So, we plan by 2027 to double our gas export to Europe and this is doable. Because we have resources. We have the mutual political will, and we have a very high level of mutual trust. So, one of the important factors of the successful implementation of the Southern Gas Corridor project apart from technical and sometimes political issues to be resolved is the high level of mutual trust and I would even call it mutual solidarity, when we immediately are seeing that someone is in need trying to support,” the president added.

In 2023, Azerbaijan plans to increase gas supplies to Europe to 11bn cu.m. As of 2022, Azerbaijan has exported 9.3 billion cubic meters of gas to Europe in the first 10 months and is expected to supply 11.5bn cu. m. of gas to Europe by the end of the year.

Oil giant BP and SOCAR stated about their plan to increase gas supplies to Europe. “We are currently working with SOCAR and other partners to see how we can increase gas supplies to Europe,” Azernews reported citing bp regional president for Azerbaijan-Georgia-Turkiye Gary Jones.

“The world needs energy that is secure, affordable, and lower carbon. This makes the role of the projects like SGC and Shah Deniz grow even more. As they help address all three of those needs. Shah Deniz and SGC are clearly today’s, but also tomorrow’s top story. There are significant expansion opportunities for both projects. Now, that there is so much demand for gas supply, this expansion has become even more critical. SGC is designed as scalable so that its initial throughput capacity can be expanded if and when needed. We are currently working with SOCAR and other partners to see how we can use this to increase gas supplies to Europe,” said Gary Jones.

Furthermore, the regional director stated that BP is investigating potential new gas sources.

“We have just spudded an exploration well on Shah Deniz to look for more gas beneath the currently producing horizons. We have also started an appraisal well from Chirag – ACG’s very first platform - to explore the deep gas reservoirs under the producing oil field. In parallel, we are evaluating how we can electrify our operations instead of powering them using gas. The electrification of the Sangachal terminal could be a good start. Replacing the Sangachal gas turbines with grid access would allow us to export the displaced gas through SGC. Both Shah Deniz and SGC can further contribute to the energy transition and security of supply,” noted Jones.

On February 4, Azerbaijan & ACWA Power agreed on project for offshore wind power. Parviz Shahbazov, the energy minister for Azerbaijan, and Mohammed Abdullah Rashid Abunayan, the chairman of the board of ACWA Power in Saudi Arabia, signed a cooperation agreement according to which, Azerbaijan will implement a 1.5 GW offshore wind energy project.


Further ease of price increases in Turkey in January was a ‘breaking news’ published by Turkish Statistical Institute (TurkStat), since the country has been witnessing over two decade high inflation and collapse of its national currency during the second half of 2022.

TurkStat said that consumer prices grew at an annualized rate of 57.7% last month, compared to 64.3% in December.

An all-time high January figure has been posted by Turkey’s exports in January when the figure stood at US$19.4 billion (TL 365.04 billion). Outbound shipments rose 10.4% from the same month of last year. Meanwhile, due to surging energy and commodity prices, Turkish imports also jumped 21% year-over-year to $33.7 billion in January. The country's foreign trade deficit reached $14.3 billion in January.

Some progress has been reached in energy sector of Turkey, which remains highly dependent on import. The country has signed a natural gas purchase agreement with Oman that will be valid for the next 10 years.

Moreover, Turkey is set to start pumping the natural gas it discovered in the Black Sea into the national grid by the end of March. It has gradually discovered about 710 bcm of natural gas since August 2020, which is estimated to have a market value of $1 trillion (TL 18.81 trillion).

“The current reserve is enough to meet a 30-year demand of Turkey, a figure he suggested could increase as the country expands its hydrocarbon explorations.

About 10 million cubic meters (mcm) of gas per day is expected to be transferred in the initial phase, while the infrastructure has been set up to enable this figure to peak at 40 mcm through 2026,” Energy and Natural Resources Minister Fatih Dönmez said.

Record figures were published at tourism sector. Some 44.6 million foreign tourists came to Turkey in 2022, leaping 80.3% from a year earlier. The country generated $46.3 billion in tourism revenues last year, up from $38.9 billion in 2019.

Speaking at a press conference to unveil the country's tourism roadmap for 2028, Culture and Tourism Minister Mehmet Nuri Ersoy said: "While world tourism reached 65% of its pre-virus level in 2022, Türkiye managed to nearly overtake its pre-virus level of 45 million. Turkey aims to attract 60 million foreign tourists in 2023. Our target is 90 million foreign tourist arrivals for 2028. The country is aiming for $56 billion in revenues this year.”