05.Mar .2023 17:50

The Week in the Neighbourhood

The Week in the Neighbourhood
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Last week, the Prime Minister of Armenia, Nikol Pashinyan paid an official two-day visit to Germany and returned “with very warm impressions,” stating that “… in bad environment, the good news is that some international attention is focused on Armenia and the region, and we should be able to use that attention to achieve lasting solutions and peace in the region”. On February 27, Russian Foreign Minister Sergey Lavrov traveled to Baku to mark the one-year anniversary of an agreement aimed at cementing an “alliance” between Russia and Azerbaijan. As for Turkey, in February its inflation dipped to a year-low of nearly 55.2%. The country has imposed a 40% additional tariff on imports of motor vehicles with only electric motors from China.The implementation came as Turkey prepares to roll out the country’s first domestically produced electric car, Togg.


On February 27, Russian Foreign Minister Sergey Lavrov traveled to Baku to mark the one-year anniversary of an agreement aimed at cementing an “alliance” between Russia and Azerbaijan.

On Tuesday, the second and final day of his visit, Lavrov accused the European Union of ‘abusing’ the Armenia–Azerbaijan relations by sending a monitoring mission to Armenia. ‘The European Union mission to Armenia raises many questions about its functions and mandate. Its technical details are very important’, said Lavrov in a joint press conference with his Azerbaijani counterpart Jeyhun Bayramov. Lavrov said that Moscow was ready to offer support in the ongoing peace talks between Armenia and Azerbaijan but that Russia ‘will not insist on offering [its] services’. He stressed that the operation of the Lachin Corridor should fully correspond to the November 2020 ceasefire agreement between Armenia and Azerbaijan. The agreement stipulated that Russian peacekeepers stationed in Nagorno-Karabakh should oversee the road. The Lachin Corridor, the only road connecting Nagorno-Karabakh to Armenia, has been blocked by a group of Azerbaijanis claiming to be eco-activists since December.

Azerbaijan plans to export 1,000 megawatts of electricity to Europe through Turkey. Jabrayil energy junction will ensure stable and reliable electricity supply of Karabakh and East Zangazur region, and will meet the needs of the mega projects, Director of the Karabakh Regional Electric Network, Mirjalal Huseynov said. According to him, this junction will have additional and more favorable access to the European energy markets through the Jabrayil - Nakhchivan - Agrı substations (Turkey), and then the Turkish energy system. Also, this junction will increase export opportunities. After many years, the Nakhchivan Autonomous Republic will be connected to the main system of Azerbaijan. In the future, 1,000 megawatts of electricity will be exported annually to Turkey and from there to Europe.

Azerbaijan and Turkey aim to increase the trade turnover to $15 billion, Turkish Ambassador to Azerbaijan, Cahit Bagci, said. According to him, last year's trade turnover was $5.8 billion, up 25% compared to 2021.

In January this year, the Marketing and Economic Operations Department of the State Oil Company of Azerbaijan (SOCAR) exported non-oil products worth $29.6 million, down $20.2 million, or 40.6%, from the previous year. In January 2023, Azerbaijan's total exports amounted to $1.9 billion, with non-oil exports accounting for $284.5 million.

International ratings agency S&P Global Ratings has affirmed the long-term issuer credit and issue ratings on Azerbaijan’s State Oil Company (SOCAR) and its senior secured debt at 'BB-', and revised up the stand-alone credit profile (SACP) to 'b' from 'b-'.

S&P Global Ratings anticipates ambitious investments from SOCAR in 2023-2024 totaling 4-5 billion manats (up to $2.941 billion), with positive Free Operating Cash Flow (FOCF) of 1-2 billion manats (up to $1.176 billion). “In our base-case scenario, we anticipate S&P Global Ratings-adjusted FFO to debt of 30%-40% in 2023-2024 (41% in the rolling 12 months ended June 30, 2022) on the back of supportive O&G prices,” the agency says.

As of March 1, 2023, the monetary base in Azerbaijan amounted to 17,248,700,000 manats ($10.15 billion), 2.2 % more than on February 1. According to the Central Bank of Azerbaijan, the monetary base decreased by 1.2% compared to early 2023 and increased by 23.7% in comparison to a year earlier.

Supplies of Russian flagship Urals crude oil to Turkey reached a four-month high in February after STAR refinery, owned by Azerbaijan's oil firm SOCAR, resumed purchases of the blend, data showed and four industry sources said. According to Refinitiv Eikon ship tracking data, 860,000 tonnes of Urals crude were shipped to Turkish ports last month, up from 620,000 tonnes in January and 370,000 tonnes in December. Supplies of Russian oil to the 200,000-barrel-per-day STAR refinery resumed in the end of January after a month-long hiatus and reached 100,000 tonnes in January and at least 300,000 tonnes in February.

As a result of investments in upgrading the Internet infrastructure in Azerbaijan, the average speed of fixed broadband Internet in the country increased by 50% compared to last year and amounted to 26.3 MB/s, Minister of Digital Development and Transport Rashad Nabiyev said.

The largest lottery prize in history was won in Azerbaijan.The 4+4 lottery drawing number 23091, which was held on February 27 and was run by Azerlotereya OJSC, an authorized lottery operator in Azerbaijan, recorded a historic victory. With just one ticket, the lucky winner scooped a prize worth 913,072 manats (over $537,000).


Standard and Poor’s has revised its outlook on the long-term sovereign credit rating on Armenia to positive from stable. Simultaneously, it affirmed the ‘B+’ long-term and ‘B’ short-term sovereign credit ratings on the sovereign.

Petrol price dropped by 29.4% in Armenia in February 2023 compared to February 2022, while diesel fuel rose in price by 3%, according to the numbers, released by the National Statistical Committee (NSC).

The British–Dutch multinational oil and gas company Shell will open three modern petrol stations in Armenia in March, Economy Minister Vahan Kerobyan said. "We have done quite a lot of work with the company and its franchise. I can say that their arrival was quite difficult given the restrictions, the fact that the high quality fuel will be imported from Europe (Greece)," he said.

Armenia's economic activity was up 10.5% in January 2023 compared to January 2022, the National Statistical Committee (NSC) said. However, compared to December 2022, it was down 46.1%. According to the official data, virtually all sectors of economy saw growth, except for the electricity production and distribution sector. The industrial output amounted to approximately 177.7 billion drams, an increase of 1.4% compared to January 2022. However, compared to December 2022, it dropped by 41.9%. The construction sector grew by 12,2% compared to January 2022 to about 16.1 billion drams. Compared to December of the last year, this figure was down by 85.9%.The services sector (excluding trade) in January 2023 amounted to about 216 billion drams, which is by 25.9% more than in January 2022. At the same time, the figure represented 17.7% drop as opposed to December 2022.

Consumer prices rose by 8.1% in Armenia in January 2023 as compared to January 2022, according to the numbers, released by NSC. Compared to December 2022 the consumer prices were up 1.4%. According to the NSC, the prices of industrial goods in January 2023 rose by 1.6% compared to the same month of 2022. In January 2023 the prices of industrial goods increased by 3% against December last year.

Armenia’s electricity production in January 2023 increased by 1.5% compared to the same month of 2022. Electricity generation in January this year amounted to 871.7 million kWh. Compared to December of last year the electricity generation was up 3.8%.

On March 2, Prime Minister of Armenia, Nikol Pashinyan left for a working visit to Germany. During his two day official visit PM met with Chancellor Scholz, visited the German Foreign Policy Society (Deutsche Gesellschaft für Auswärtige Politik – DGAP), and took part in a discussion on the topic “Security and Stability in the South Caucasus: Prospects for Armenia”. During a joint press conference with the German Chancellor and discussions of Armenia’s foreign policy in the DGAP, Pashinyan talked about the importance of hosting an EU monitoring mission in Armenia and deepening bilateral relations with the European Union.

Pashinyan summarized his visit to Germany in a meeting with representatives of the Armenian community. “In general, I don't want to draw premature conclusions, but one thing is clear that when we look at the events that happened after the blockade of Lachin Corridor, the resolutions of the European Council, as well as the statements of our partners in the international community, there is a certain change in perception of our views, our positions, our problems. Also, the perception of our country in the European Union has changed significantly. I cannot say that we have guaranteed the security of our country today, especially in these conditions, when geopolitical earthquakes and solutions are taking place. Under these conditions, we are in a very dangerous environment. But on the other hand, we also have an idea of what needs to be done in terms of managing this security environment. The peace agenda is very important for us. We understand that it is not an easy task for us. We understand that there are many risks, we understand that peace does not depend only on us, on our desire. Others must also want it, others also want it, but the peace wanted by others does not coincide with the peace wanted by us, and the whole purpose and meaning of the diplomatic process should be for this to happen. In general, I must say that we are in a very difficult and dangerous period. We need maximum seriousness and flexibility in order to overcome the existing challenges. We do not have deep economic problems, we do not have problems in terms of internal security and democracy. The people have and will continue to have the right and opportunity to make decisions by their choice and vote. Our problems are external, our problems are related to the external environment and security, and it is these concerns that we first of all share on international platforms. In this sense, we do not have good news, but in a bad environment, the good news is that some international attention is focused on Armenia and the region, and we should be able to use that attention to achieve lasting solutions and peace in the region," the Prime Minister said.


Turkey’s inflation eased slightly more than expected in February, official data revealed on Friday, following massive earthquakes that jolted its southeastern region just under a month ago. Yet, prices continue to rise on a monthly basis, driven by higher prices of food and services. The annual consumer price index (CPI) dropped to 55.18% in February, as per the Turkish Statistical Institute (TurkStat), driven mainly by the so-called base effect, marking a fourth straight month of slowdown and the lowest level in a year.

Turkey has strengthened its position as a major player in wind energy, ranking sixth in Europe in installed power capacity, according to the "2022 European Wind Statistics and 2023-2027 Outlook" report by the European Wind Energy Association WindEurope. The report reveals that Türkiye added 867 megawatts of wind energy capacity in 2022, bringing its total installed power to 11,969 megawatts, up from the previous year's ranking. The average capacity of the wind turbines added to the system last year was 4.1 megawatts for onshore wind farms and 8 megawatts for offshore wind farms.

Turkish Airlines closed 2022 with 2.7 billion USD net profit standing out from its competition thanks to its operational agility, wide flight network, and highly skilled workforce it maintained during the coronavirus pandemic, the company said. It reaped a record-high revenue of $18.4 billion last year, exceeding its 2019 pre-virus level by 39%. With a fleet of 394 aircraft, Turkish Airlines carried around 72 million passengers with an 85.8% domestic and 80.1% international load factor. The flag carrier maintained its effective cost management in 2022 by lowering its unit expenses excluding fuel by 2% compared to 2019. The airline's earnings before interest, taxes, depreciation, amortization, and rent (EBITDAR) amounted to $5.4 billion. Its cargo revenues surged 120% compared to 2019, reaching $3.7 billion last year.

The Turkish economy expanded by 5.6% in 2022, on a yearly basis, according to official figures released on February 28. The country's gross domestic product (GDP) reached 15 trillion Turkish liras ($905.5 billion) last year, the TurkStat announced. The GDP per capita was 176,589 Turkish liras ($10,655) in 2022, it added. Households' spending was up by 19.7% in 2022, on a yearly basis, while the share of their consumption expenditures in the country's GDP was at 57.5%. Exports of goods and services increased by 9.1%, imports increased by 7.9% compared to the previous year's chain-volume index in 2022.

Chinese short video-sharing app TikTok has been fined TL 1.75 million ($93,000) by Turkish authorities for failing to take sufficient measures to protect users from unlawful processing of their data, the Personal Data Protection Board (KVKK) said.

Turkey has imposed a 40% additional tariff on imports of motor vehicles with only electric motors from China, a presidential decision published in the country's Official Gazette showed on Friday.The implementation came as Turkey prepares to roll out the country’s first domestically produced electric car, Togg.

Turkish central bank unveiled waivers to support loans in quake zone. The central bank has tweaked bank bonds and pre-requisite reserve holding regulations to encourage loans to the earthquake-hit zone. The magnitude 7.7 and 7.6 quakes on Feb. 6 flattened a swathe of the southeast, leaving more than 200,000 buildings either completely collapsed or damaged to the point where they require immediate demolition. The disaster killed over 45,000 people and left more than 2 million people homeless. The central bank said loans extended to certain individuals or companies until the end of August will be exempt from the banks' obligation to hold bonds or reserves depending on loan types or the loan growth rate, as per the document.