The Central Bank of the Republic of Türkiye raised its policy interest rate by another 500 basis points to 35%. National income mark of Türkiye this year will exceed USD 1 trillion. Armenia's economic activity in the first 9 months of 2023 was up 9.7% when compared to the same time span of 2022. Armenia sees no advantage in continuing to host Russian military bases on its territory after Azerbaijan retook the contested region of Nagorno-Karabakh, the Armenian prime minister said. Azerbaijan's banking sector made a net profit of US$789.94 million in January-September of this year, recording 22% growth.
Here is a rundown of the latest economic, business and political developments around Georgia's neighboring Türkiye, Armenia and Azerbaijan during the last week.
Türkiye
The Central Bank of the Republic of Türkiye on Thursday raised its policy interest rate by another 500 basis points to 35%. Over the course of five monetary policy meetings, the bank has been gradually increasing the rate, also known as the one-week repo auction rate, from 8.5% in May to 35% this month.
Türkiye’s Trade Minister Ömer Bolat has said the national income would exceed the one trillion-dollar mark this year, asserting that the country was on track to join the world's top 10 economies in the coming years. Addressing a meeting with businesspeople in Istanbul on Saturday, Bolat stressed that the momentum this year would see Türkiye ending with a gross domestic product (GDP) growth of over 4%.
Türkiye said that oil production in the southeastern region of Gabar had reached 25,000 barrels a day, with the country's top economic official saying it would gradually help curb the chronic current account deficit and accelerate reserve accumulation. President Recep Tayyip Erdoğan announced the discovery of an oil reserve in Şırnak province's Mount Gabar in late December 2022. Erdoğan said the reserve contained an estimated 150 million barrels of oil valued at approximately $12 billion. It was followed by the discovery of another reserve in the region this May, which the state oil company Turkish Petroleum Corporation (TPAO) said boasted about 1 billion barrels and a market value of up to $80 billion.
Turkish President Recep Tayyip Erdogan has submitted a bill on Sweden’s NATO membership bid to parliament, after months of back-and-forth with Western countries over the issue. Erdogan told his NATO allies at a summit in July that he would send the legislation to the Turkish parliament when it reconvened on October 1, having previously raised objections over a range of security concerns. Since parliament reopened, however, Turkish officials have repeatedly said Stockholm needed to take more concrete steps to clamp down on the outlawed Kurdistan Workers’ Party (PKK) armed group, which has been designated a “terrorist organisation” by Turkey, the European Union and the United States.
Türkiye's consumer confidence index increased to 74.6 in October, up from 71.5 in September, the country's statistical office said. The consumer confidence index hiked 4.4% month-on-month, posting the second consecutive increase after declining three months in a row, the Turkish Statistical Institute (TurkStat) data showed. Sub-indices for financial situation expectations of households over the next 12 months surged 5.4% and general economic situation expectations over the next 12 months gained 7.2% in September.
Israel said that it was recalling its diplomats from Turkey over “increasingly harsh statements” coming from the government in Ankara. The announcement came after Turkey’s president told a massive protest crowd in Istanbul that his government was preparing to declare Israel a “war criminal” due to its actions in the Gaza Strip. Israel previously removed its diplomats out of Turkey for security reasons. But Israeli Foreign Minister Eli Cohen said, that they were being ordered to pull out now for a reassessment of the ties between Turkey and Israel. Cohen's statement suggested a move that could sever the newly restored diplomatic ties between the two countries. There was no immediate response from the Turkish Foreign Ministry. Earlier Saturday, Turkish President Recep Tayyip Erdogan said during the pro-Palestinian rally that attracted hundreds of thousands of participants that his country planned to formally accuse Israel of committing war crimes in the Gaza Strip. Turkey and Israel appointed ambassadors to their respective countries last year, opening a new chapter in diplomatic relations following years of tensions. In 2018, Turkey withdrew its ambassador from Israel and kicked out Israel’s ambassador to protest the killing of dozens of Palestinians by Israeli gunfire in protests along the Gaza frontier.
Armenia
Armenia's economic activity in the first 9 months of 2023 was up 9.7% when compared to the same time span of 2022, the National Statistical Committee (NSC) said. The growth in September 2023 as opposed to 2022 September was up 5.6% and up 3.7% compared to August this year. According to the official data, all economic sectors saw growth, except for production of industrial goods and electricity generation. The industrial output was down 0.6% to over 1.8 trillion drams. It was also down 4.3% in 2023 September compared to 2022 September. The agricultural gross output amounted to about 619.7 billion drams, up 1.7% as opposed to the first 9 months of 2022. The construction sector grew by 17% year-on-year to 349.3 billion drams. In September 2023 it was up 15.7% from 2022 September.
Consumer prices in Armenia in the first nine months of 2023 increased by 2.8% when compared to January-September last year, according to the National Statistical Committee (NSC). It said price growth in September 2023 alone when opposed to 2022 September was 0.1%, and 0.9% compared to August of this year. Industrial goods prices rose by 1.3%. In September of this year, they were up 5.2% when compared to 2022 September and up 0.6% compared to August 2022.
Armenia’s foreign trade in the first 9 months of 2023 amounted to over $13.7 billion, surging by 47.2% from the same time span of 2022, according to the numbers, released by the National Statistical Committee. In September 2023 alone the foreign trade when compared to September last year, was up 15.9%, and up 7.3% when compared to August 2023. According to the statistics, Armenian exports soared by 48.5%, to over $5.2 billion. In September, 2023 alone compared to September last year, they were up 31.5% and compared to August this year they were up 29.5%. Imports during the reporting period totaled about $8.5 billion, recording a 46.4% increase compared to January-September 2022. In September of the current year alone, imports grew by 5.6% year-on-year and decreased by 6% from the previous month of August.
Electricity production in Armenia decreased by 2.8% in the first nine months of 2023 compared to the same period of 2022 to over 6.3 billion kWh. Electricity production in September 2023 alone was up 3.9% when compared to September last year, and up 18.5% compared to August this year.
Armenia is ready to restore gas pipelines that used to bring natural gas to Armenia from Azerbaijan in case the countries have no political issues, Armenian Deputy Minister of Territorial Administration and Infrastructure Hakob Vardanyan said during the Silk Road international conference in Georgia’s Tbilisi. "We had such an experience in the Soviet period. We received gas from Azerbaijan through three huge pipelines. Now we can restore these pipelines if there are no political issues between our countries. And we can also become a transit country for gas from Azerbaijan to Europe; the same goes for electricity. We are ready to build and rebuild all these communications," Vardanyan said. According to him, this can diversify the energy system. Armenia currently buys gas from Russia that is shipped across the territory of Georgia and also from Iran, which is converted into electricity here and shipped back.
Armenia sees no advantage in continuing to host Russian military bases on its territory after Azerbaijan retook the contested region of Nagorno-Karabakh, the Armenian prime minister told the Wall Street Journal in an interview. Azerbaijan seized Nagorno-Karabakh, which is internationally viewed as Azeri territory but had been run by ethnic Armenians since the breakup of the Soviet Union in the 1990s, in a lightning military operation on Sept. 20. "These events have essentially brought us to a decision that we need to diversify our relationships in the security sphere, and we are trying to do that now," Prime Minister Nikol Pashinyan told the WSJ.
Armenia's Foreign Ministry summoned Russia's ambassador to Yerevan Sergey Kopyrkin to hand a note of protest over "insulting and absolutely unacceptable statements" made during a TV program aired by Russia’s state-run Channel One. A talk show on Russia's Channel One criticized Armenian Prime Minister Nikol Pashinyan for his handling of the conflict with Azerbaijan, portraying him as a puppet of the West who seeks to break Armenia's close relations with Russia.
Azerbaijan
In January–August of this year, Azerbaijan imported 1,215,579,800 cubic meters of natural gas worth $172,963,950 from Turkmenistan, respectively, 719,773,700 cubic meters (2.45 times) and $112,669,050 (2.87 times) more than a year earlier. In January–August of this year, Azerbaijan imported 2,030,501,360 cubic meters of natural gas for $316,734,580, respectively, 1,468,604,070 cubic meters (3.61 times) and $253,931,110 (5.04 times) higher than for the same period in 2022.
Azerbaijan's banking sector made a net profit of 832.9 million manats ($789.94 million) in January-September of this year (+21.9%), the Central Bank of Azerbaijan said. During the nine months, the sector's operating income amounted to 3,570.9 million manats ($2.1 billion) (+26.3%), operating expenses to 2,303.7 million manats (nearly $1.36 billion) (+27.1%), loan loss provision made up 220.6 million manats ($129.76 million) (+27.2%), windfall gains stood at 0.9 million manats ($0.53 million) and profit tax payments accounted for 214.7 million manats ($126.29 million) (+36.75%). The assets of Azerbaijan-based banks, as of October 1, amounted to over 45,530.5 million manats ($26.8 billion), up 4.3% from a year earlier.
As of October 1, 2023, overdue loans in Azerbaijan amounted to 519.8 million manats ($305.76 million), down 2.7% from a month earlier. The amount of problem loans in the country decreased by 12.4% compared to the beginning of the year, and by 20% in comparison to a year earlier. By the end of September of this year, the share of overdue loans in the total loan portfolio was 2.3%, while this figure was 2.4% at the end of August, 2.9% at the end of last year, and 3.3% at the end of September last year.
In January–September of this year, 1,535,800 foreigners and stateless persons traveled to Azerbaijan from 184 countries, or 32.1%, more than in the same period last year. 31% of tourists came from Russia, 17.8% from Türkiye, 7.5% from Iran, 5% from India, 4.8% from Georgia, 4.3% from Saudi Arabia, 2.7% from Kazakhstan, 2.5% from Pakistan, 2% from the United Arab Emirates (UAE), 1.8% from Uzbekistan, 1.7% from Israel, 1.5% from each of Kuwait and Ukraine, 1.4% from Belarus, 1.2% from Turkmenistan, 1.1% each from China and Great Britain, and 11.1% from other countries. Men constituted 69.7%, while women comprised 30.3% of the foreigners.
Fitch Ratings has affirmed State Oil Company of the Azerbaijan Republic's (SOCAR) Long-Term Issuer Default Rating (IDR) and senior unsecured rating at 'BB+'. The Outlook remains Positive. "We have revised our assessment of SOCAR's Standalone Credit Profile (SCP) to 'bb-' from 'b+' in light of its stronger financial profile," reads the report.
The European Bank for Reconstruction and Development (EBRD) is financing the construction of a 240-megawatt (MW) wind power plant (Khizi-Absheron) in eastern Azerbaijan. This will be the first utility-scale wind power project in the country and the largest in the Caucasus region. The Bank has arranged a syndicated loan worth $197.1 million (186.9 million euros) to ACWA Power Azerbaijan Renewable Energy, the project company owned by ACWA Power, an international developer, investor, co-owner and operator of a portfolio of power-generation and desalinated water-production plants. The project will be co-financed by the OPEC Fund for International Development (OPEC Fund).
In the rating table of the Cybersecurity Index, the Republic of Azerbaijan has risen 36 places and moved from 86th to 50th place. The work is currently underway towards the establishment of a National Cyber Centre.
