Armenia's economic growth will slow down to 6.5% in 2023 and to 5.5% in 2024 depending on domestic and external demand, Asian Development Bank says. The Bank expects 2.5% growth this year in Azerbaijan and 2.8% in 2024. In case of Turkey, expectations were published by the World Bank, which has revised Turkey’s economic growth for this year up to 3.2%, from 2.7%, while the growth expectation for next year - up to 4.3%, from 4%.
Below are the main economic and business developments in Georgia’s neighboring Turkey, Azerbaijan and Armenia.
Turkey
The World Bank revised up Turkey's economic growth estimates for 2023 and 2024. Turkish economy's growth forecast for this year is revised up to 3.2%, from 2.7%, while the growth expectation for next year is revised up to 4.3%, from 4%, according to the report titled "Weak Growth, High Inflation, and a Cost-of-Living Crisis." The financial institution said robust growth in private consumption and exports served as a significant driver of regional growth last year and helped Turkey's output expand by 5.6% in 2022.
Turkey's budget deficit in the first quarter of this year was 257.83 billion Turkish liras ($13.65 billion). The Turkish Treasury and Finance Ministry said its revenues totaled 801.15 billion liras ($42.4 billion) in the first three months of this year, up 30.8% on a yearly basis. Budget expenditures amounted to 1.06 trillion liras ($55.7 billion) during the same period, up 57% from January-March 2022.
Turkey’s central bank on Friday tightened regulations deterring banks from holding foreign currency as the lira comes under pressure. The decisions strengthened pre-existing rules on holding more lira savings, one of the tools policy makers have been using to stabilize the local currency. According to the latest changes, if a commercial lender doesn’t have 60 percent of its deposits in Turkish liras, it will be forced to park more of its FX at the central bank. This means the reserve requirement ratio for FX deposits and participation funds of up to one-year maturity has been raised from 25 percent to 30 percent. A second regulation says lenders will have to buy seven percentage points of additional local currency-denominated government bonds if their deposits fall under the 60 percent level.
Turkey is set to put the natural gas it discovered in the Black Sea into use as of April 20, President Recep Tayyip Erdogan said late Wednesday. Erdogn was speaking on a live broadcast where he said Türkiye would “start to use its own natural gas” from then on. In December, the president announced that the country’s drillship Fatih had discovered an additional 58 billion cubic meters (bcm) of natural gas reserves at 3,023 meters (9,917 feet) at the Çaycuma 1 block in the Black Sea. He noted that Türkiye’s natural gas reserves in the Black Sea are measured at 710 bcm, with a market value of $1 trillion (TL 18.75 trillion).
Turkey’s exports increased by 4.4% in March compared to the same month of the previous year and reached $23.6 billion (TL 453.82 billion), marking the highest-ever monthly sales, Trade Minister said. Meanwhile, the country's imports increased by 4.2% to $32.1 billion. Last month, the foreign trade volume increased by 4.3% to $55.7 billion. The foreign trade deficit was recorded as $8.5 billion with an increase of 3.7% in this period.
Istanbul Airport became one of the busiest airports in the world last year, according to Airports Council International (ACI) World's report. Istanbul Airport was the seventh busiest airport with a total passenger number of 64.29 million, up by 73.8% on a yearly basis. Istanbul Airport was the 14th busiest in 2021 and 28th in 2020, according to the report. The number of passengers served by Istanbul Airport was also up by 23.2% compared to 2019, the pre-pandemic era.
Armenia
Armenia's economic growth will slow down to 6.5% in 2023 and to 5.5% in 2024 depending on domestic and external demand, according to the Asian Development Outlook (ADO), released by the Asian Development Bank (ADB) for April 2023. “Inflation is also projected to slow to 7 percent in 2023 and to 6.2 percent in 2024," the report said. It says that Armenia's economic growth has more than doubled from 5.7 percent in 2021 to 12.6 percent in 2022, mainly due to strong demand and investment growth, driven by a large inflow of people and capital from Russia.
The Armenian government approved a draft law on ratification of the intergovernmental agreement between Armenia and Russia on the purchase and sale of the Russian Federation's share in the paid-up authorized capital of the Eurasian Development Bank (EDB). Russia lost its majority stake in the Eurasian Development Bank after the Board of the Kazakhstan-based bank approved a redistribution of member states’ shares in January 2023. Russia’s share in the EDB was to be reduced to less than 45%, while the remainder of its shares were to be equally distributed among the other member states. Before the decision of the bank's Board, about 66% of the EDB's authorized capital belonged to Russia, about 33% - to Kazakhstan, and 1% - to Belarus. Tajikistan, Armenia and Kyrgyzstan had small stakes. After acquiring 64,000 shares of the EDB worth $64 million, Armenia's share in EDB is expected to amount to 4.22%," according to the Armenian government.
In January-February 2023, Armenia generated about 1.7 billion kWh of electricity, which is 0.2% less than the electricity generated in the first 2 months of 2022, the National Statistical Committee said. It said thermal power plants accounted for the largest share of the generated electricity producing 830.7 million kWh (55% of the total), up 0.4% from the year ago. The nuclear power plant accounted for 28.2%, producing 608.1 million kWh (an increase of 2.3%), and hydroelectric plants ' share was 13.3%. They produced 217.8 million kWh (a decrease of 21.7%). Solar power plants produced 21.5 million kWh of electricity during the reporting period (3% of the total). The figure represents 2.2 times growth against the same time span of 2022, and wind farms produced only 0.8 million kWh (20% drop).
Armenian authorities are preparing to launch the Margara checkpoint on the border with Turkey, Rustam Badasyan, head of the Armenian State Revenue Committee (SRC) said. According to him, the parties have already reached an agreement on the upcoming opening of the border for persons with diplomatic passports, as well as for citizens of third countries. The Margara land checkpoint on the Armenian-Turkish border was opened for the first time in 30 years in February this year for Armenian trucks to deliver tons of food, medicine and other relief supplies to Turkey’s regions affected by the powerful earthquake. Turkey shut down its border for Armenia in 1993, in a show of solidarity with Azerbaijan which was locked in a conflict with Armenia over the Nagorno-Karabakh region. Armenia also started the repair of a large section of Armavir - Gyumri road running along Armenia’s border with Turkey.
Armenia's exports to Russia, Kazakhstan, Kyrgyzstan and Belarus , which all make the Eurasian Economic Union (EEU), have increased about 10 times since the creation of the organization, said Ashot Tavadyan, head of the Center for Economic Research. "In 2015, the EEU accounted for about 15% of Armenia's total exports. In 2021, this figure reached 29.3%, and in 2022 it surged to 46.8%," Tavadyan said at a last week discussion on Eurasian integration. He recalled that Russia is Armenia's main trade partner, and the share of Armenian exports to Russia is the most diversified with the bulk being finished goods. Tavadyan said exports substantially increased to all EEU member countries. For instance, exports to the Russian Federation have grown 2.9 times, toh Kazakhstan - 2 times, to Belarus - 2.6 times and to Kyrgyzstan - 2.2 times.
Petrol price fell by 26.9% and that of diesel fuel dropped by 2.8% in Armenia in March 2023, when compared to March 2022, according to the National Statistical Committee (NSC). In March 2023, prices for petrol and diesel fuel increased by 7% and 1.5%, respectively as opposed to February of the same year. Petrol and diesel fuel prices decreased by 14.4% and 6.1%, respectively, in March this year compared to December last year. On the whole, according to the statistical data, non-food products prices in March were up 4.6% from March last year and 0.2% from February this year.
Armenia's 12-month consumer inflation in March 2023 was up 5.4% compared to March 2022. In March 2023 prices were down 0, 7% compared to February of the same year. In January-March 2023, prices increased by 7.2% compared to the same period of 2022. The prices of food products and non-alcoholic beverages increased by 5.1% in March 2023 compared to March 2022 and decreased by 2.2% compared to February 2023.
Armenia's domestic trade upped 18% in the first two months of 2023 from the same time span of 2022 to about 622.5 billion drams (US$ 1.6 billion).
Armenia’s construction sector grew by 13.2% in the first two months of 2023 from the first two months of 2022 to a little over 37.6 billion drams (US$ 97.3 million).
About 2.5 million tons of various goods were transported in Armenia in the first two months of 2023, an 1.6% drop compared to the same period of time in 2022,while the number of transported passenger surged by 33.1% to about 26.2 million. During the period under review, about 1.5 million tons of cargo were transported by trucks, by 8.8% less than in January-February 2022.
Azerbaijan
The Asian Development Bank (ADB) expects the value of the gross domestic product (GDP) per capita in Azerbaijan this year to increase by 2.5% compared to 2022. The bank expects GDP per capita growth in Azerbaijan to be 2.8% in 2024. ADB predicts a 3% increase GDP per capita in the Caucasus and Central Asia region this year and a 3.2% increase next year.
Azerbaijan Tourism Agency is eyeing up to 4 million foreign tourists per year by 2027, said Chairman Fuad Naghiyev at the opening ceremony of the 19th Azerbaijan International Tourism and Travel Fair (AITF 2023) held at the Baku Expo Center. According to him, it is planned to increase the annual number of local tourists to 6 million in the next three years. The chairman also noted that in 2026, the gross domestic product (GDP) in the tourism and public catering sector will increase by 1.5 times compared to 2019, and a 20% annual growth is expected in this area.
As of April 1, 2023, the monetary base in Azerbaijan amounted to $10.41 billion, 2.6 % more than on March 1, the Central Bank of Azerbaijan said. The monetary base decreased by 1.3% compared to early 2023 and increased by 23.2% in comparison to a year earlier.
Tax revenues in Azerbaijan up 75%. In January-March of 2023, compared to the relevant period of 2022, the volume of the tax revenues to the state budget through the State Tax Service increased by 74.8% and reached 4 billion 899.5 million manats ($2.9 billion), said Economy Minister Mikayil Jabbarov. "During this period, the tax revenues from the non-oil gas sector grew by 16.4% YoY and amounted to 2 billion 618 million manats ($1.5 billion). The significant increase in fiscal revenues strengthens the sustainability of our economy," he tweeted.
In the first quarter of 2023, the financial flows in the field of agriculture of Azerbaijan increased by 75 percent compared to the same period last year and amounted to AZN191.5m ($112,6m).
Turkish BOTAS and Azerbaijani SOCAR (State Oil Company of Azerbaijan) have established a new company to sell gas to Europe, Turkish Energy and Natural Resources Minister Fatih Donmez said in an interview with CNN Turk.
