Azerbaijan's territorial integrity of 86,600 square kilometers that Armenia is ready to recognize includes also Nagorno-Karabakh, Armenian Prime Minister Nikol Pashinyan said last week. Ahead of today’s presidential election runoff, which will decide whether President Recep Tayyip Erdogan extends his rule into a third decade, the Turkish central bank's net forex reserves dropped into negative territory for the first time since 2002, standing at $-151.3 million on May 19. The Turkish lira weakened to a record low of 20 against the dollar on Friday, May 26. Azerbaijani banking sector's net profit upped by 39%, assets of the sector recorded 14% growth.
Here is a rundown of the latest economic, business and political developments around Georgia's neighboring Turkey, Azerbaijan and Armenia during the last week.
Armenia
Azerbaijan's territorial integrity of 86,600 square kilometers that Armenia is ready to recognize includes also Nagorno-Karabakh, Armenian Prime Minister Nikol Pashinyan said at a press conference on May 22. "These 86,600 square kilometers also include Nagorno-Karabakh. But we also say that the issue of rights and security of Nagorno-Karabakh Armenians should be discussed in the Azerbaijan-Nagorno-Karabakh format," he said. Asked directly whether the Armenian government recognizes Artsakh (the Armenian name of the region) as part of Azerbaijan, Pashinyan replied that no matter what today's authorities in Yerevan say, "all previous Armenian governments have recognized the territorial integrity of Azerbaijan."
"I emphasize that any statement and document that ignores the sovereignty of the Republic of Artsakh, the right of its people to self-determination and the fact of its implementation are unacceptable to us," Artsakh (Nagorno-Karabakh) President Arayik Harutyunyan said.
Artsakh parliament also denounced Pashinyan. In a statement issued on May 22, the National Assembly condemned Armenian Prime Minister Nikol Pashinyan for saying that Yerevan was ready to recognize Nagorno-Karabakh as part of Azerbaijan.
Six months into blockade, Nagorno-Karabakh faces energy crisis as key reservoir dries up. The region's already meager electricity generation capacity is in jeopardy, and an "environmental disaster" could be at hand, the local de facto authorities say.
The U.S. Department of Commerce has imposed export restrictions on 71 companies, including an Armenia-registered company Medisar, which is said to supply industrial raw materials, chemicals and laboratory equipment. The restrictions are imposed due to their support of the Russian military-defense complex. According to earlier reports, several companies registered in Armenia had fallen under the U.S. anti-Russian sanctions, including Tako LLC (another name - Taco LLC, a partner of the Russian Radioavtomatika LLC) and Milur Electronics LLC, the Armenian branch of Milandr chipmaker.
EU's international special envoy for the enforcement of EU sanctions, David O'Sullivan met with Armenian Deputy Foreign Minister Mnatsakan Safaryan. The interlocutors discussed a set of issues related to cooperation between Armenia and the EU, the press service of the Armenian Foreign Ministry reported. Earlier, Prime Minister Nikol Pashinyan said that Armenia, as a member of the Eurasian Economic Union with deep and strategically important partnership ties with Russia, cannot afford to come under the Western anti-Russian sanctions. According to him, Armenia will work as much as possible in its relations with Russia to the extent that the country does not fall under these sanctions.
Armenia's GDP in the first quarter of 2023 grew by 12.1% compared to January-March 2022, according to the numbers, released by the National Statistical Committee (NSC). It said in current prices the GDP at the end of the reporting period amounted to about 1.8 trillion drams (US$ 4,640,400,000). Per capita GDP in market prices amounted to 600,240 drams, or $1,529 and 1,423 euros. Compared to the first quarter of 2022, the highest growth was posted by the information and communication sector, which surged by 60.5%, accommodation and catering services grew by 39.1%, and transport and storage services by 26.3%.
Armenia's economic activity upped by 12.2% in January-April 2023 relative to the same period of 2022. In April 2023 alone the economic activity was up 3.4% from the previous month and up 12.1% as opposed to April of 2022. All sectors of economy posted growth, except for electricity production and non-food prices index. During the reporting period, industrial output amounted to more than 747.8 billion drams (US$ 1.9 billion), having increased by 2.4% against January-April 2022. However, a 0.8% decline was registered in April 2023 as compared to April 2022.
Electricity production in Armenia dropped by 3.3% in January-April 2023 compared to the same period of 2022, the National Statistical Committee reported. It said electricity generation in the reporting period amounted to a little over 3 billion kWh. Electricity production in April compared to March of this year decreased by 15.9%, and compared to April of last year increased by 88%.
Armenia's construction sector grew by 15.6% in the first quarter of 2023, Economy Minister Vahan Kerobyan told the parliament. He said that construction is one of the fastest growing sectors of the economy. Last year, the sector grew by more than 12%. "In one year, 3,300 new jobs were created in the construction sector and their number increased from 11,000 to 14, 300," the minister said. Kerobyan stressed that last year about 320,000 square meters of housing was commissioned in the country, which is 0.3% of the total housing stock of the country. According to official statistics, the construction sector in January-March 2023 amounted to about 64.9 billion drams (US$ 169 million) in current prices.
Sea shipping through a port in Georgia has been offered to Armenian importers and exporters as an alternative to the Upper Lars checkpoint on the Russian-Georgian border for shipping goods to and from Russia.
Consumer prices in Armenia rose by 6.2% in the frist four months of 2023 compared to the same time span last year. In April 2023 prices were up 0.1% from March of the same year and up 3.2% from April of 2022. According to the NSC, prices of industrial goods in the first four months of 2023 decreased by 1.1% compared to the same period of 2022. At the same time, in April this year, these prices were down 3.3% compared to April last year.
Turkey
Sinan Ogan, who finished third in May 14’s Turkish presidential election, has thrown his support behind the incumbent, Recep Tayyip Erdogan, for the the run-off that takes place on May 28. Ogan endorsed Erdogan at a news conference in the capital Ankara on Monday and said his campaign made nationalists “key players” in Turkish politics. “We believe our decision will be the right decision for our country and nation,” Ogan said, citing Erdogan’s parliamentary majority as a reason for his decision. “It is important that the newly elected president is under the same [leadership] as the parliament. [Kilicdaroglu’s] alliance on the other hand, could not display sufficient success against the People’s Alliance which has been in power for 20 years, and could not establish a perspective that could convince us about the future.”
The Turkish central bank's net forex reserves dropped into negative territory for the first time since 2002, standing at $-151.3 million on May 19, official data showed on Thursday, as it sought to counter forex demand ahead of Sunday's runoff vote. Forex demand in Turkey surged to record levels ahead of May 14 on companies' and individuals' expectations that the lira, which lost 44% in 2021 and 30% in 2022, will plunge after the vote. The central bank's forex reserves have sagged in recent years due to costly market interventions and other efforts to cool forex demand. The bank's net reserves dropped by $2.48 billion in the week to May 19, to their lowest level since February 2002. They have dropped $27.7 billion since the end of 2022.
The Turkish lira weakened to a record low of 20 against the dollar on Friday, May 26, ahead of today’s presidential election runoff, which will decide whether President Recep Tayyip Erdogan extends his rule into a third decade. The lira reached 20.00 against the US currency at 0508 GMT and continued to hover near that level. It closed at 19.8695 on Thursday and has weakened 6.4 percent so far this year. Turkey’s sovereign dollar bonds and equities have plunged, while the cost of insuring exposure to Turkish debt has spiked since the presidential election on May 14. On Thursday evening Erdogan said in an interview that Gulf states recently sent funding to Turkey, briefly helping relieve the central bank and markets, and that he intends to meet with and thank their leaders after Sunday’s runoff.
Turkey advanced to rank 5th biggest investor in Germany for 2022. The county implemented a record number of projects and ranked among the top five investors in Germany in 2022, as Europe’s biggest economy saw foreign engagement remain stable despite the challenging environment, data from the country's economic development agency, Germany Trade & Invest (GTAI) showed. Last year, there were 1,783 new settlements and expansions, 23 fewer than in 2021, but 101 more than in 2020, the GTAI said.
Turkey's solar power has exceeded a highly anticipated threshold of 10,000 megawatts (MW), according to the latest industry data, as the country ramps up efforts to ensure renewable energy sources make up a bigger slice of the supply. Turkey’s overall installed electricity capacity increased to 104.6 gigawatts (GW) as of May 16, with solar energy reaching 10,007 megawatts, comprised of power plants spread across 78 provinces. Thirty-five of these boast plants featuring over 100 MW of capacity. The drive to curb vast energy imports over the last two decades has seen Turkey reach a level where renewables account for over half of the country's total installed power capacity. The push has seen the installed capacity of solar power rise from just 40 MW in 2014. The renewable energy output has been propelled by large-scale solar and wind power tenders. Exceeding the installed solar power capacity of 10,000 megawatts “is an extremely important milestone for the sector,” said Cem Ozkok, head of the Energy Investors Association (GUYAD).
Turkey is seeing indications of oil and natural gas reserves in the eastern Black Sea, the energy minister said, hinting at a significant potential for additional discoveries in the area that would build on vast natural gas discovered over the recent years. Ramped-up hydrocarbon explorations in the Black Sea have been part of Turkey’s proactive approach to fully assess the region's potential to secure domestic resources to curb its major dependence on external resources. It has deployed drillships and seismic vessels to accelerate exploration activities and unlock the region's hydrocarbon resources. Turkey this April started pumping natural gas into the national grid from a vast reserve in the Black Sea, discovered gradually since August 2020. The reserve is estimated to hold over 710 billion cubic meters (bcm) of gas, which Energy and Natural Resources Minister Fatih Donmez said was estimated to be worth around half a billion dollars, promising to curb the country's dependence and cut consumer energy prices.
Russian energy company Gazprom on Thursday denied Turkish media reports that it was in negotiation to acquire the Turkish Petroleum Pipeline Corporation (BOTAS). "The information disseminated in a number of Turkish media about alleged negotiations or intentions regarding the transfer of the Turkish company BOTAS to Gazprom's management is completely untrue," the Russian gas giant said in a statement. BOTAS also refuted the allegations, saying that “the report about the sale or transfer of BOTAS, Turkey's leading public institution in the energy sector, to any country or company, including Gazprom, are baseless.”
Turkey hosted 9.5 million foreign tourists in the first four months of this year, according to official figures revealed. The number of foreign arrivals in January-April rose 27.51% on a yearly basis, the country's Culture and Tourism Ministry stated. Istanbul, Turkey's largest city by population and a top tourist draw, welcomed over half of all foreign visitors, or nearly 4.77 million, in the four-month period. It was followed by the Mediterranean resort city of Antalya with 1.6 million foreign tourists and Edirne in northwestern Turkey, which borders both Bulgaria and Greece, with 1.1 million foreign visitors. As for the nationalities of foreign tourists, Russia took first place with 12.1% — nearly 1.15 million visitors — over the same period, followed by Germany (10.14%) and Bulgaria (8.37%). In April alone, 3.3 million foreigners visited the country, up 29.03% on a yearly basis.
Azerbaijan
Azerbaijan's banking sector made a net profit of 345.2 million manats ($203.06 million) in January-April of this year (+39.1%), the Central Bank of Azerbaijan said. During the two months, banks' operating income amounted to 1.472 billion manats ($0.87 billion) (+28.8%), operating expenses to 936.5 million manats ($550.88 million) (+26.6%), allocations to special reserves made up 101.7 million manats ($59.82 million) (+4.2%), windfall gains stood at 0.3 million manats (no gain was recorded last year) and profit tax payments accounted for 88.9 million ($52.29 million) manats (+55.7%).
As of May 1, 2023, the assets of Azerbaijan-based banks amounted to over 45,582.7 million manats (over $26.81 billion) for the first time, up 13.5% from a year earlier. The loans issued to customers amounted to 19.166 billion manats (more than $11.27 billion). Year-on-year, the loan portfolio grew 15.1%, and the share of loans in assets rose from 41.5% to 42%. In the reporting period, the liabilities grew by 13.1% to 39.771 billion manats ($23.39 billion), with the deposit portfolio rising by 13.1% to 32.367 billion manats ($19.04 billion). Individuals accounted for 11.955 billion manats ($7 billion), while legal entities made up 20.411 billion manats ($12.01 billion). The liabilities of the banks to the Central Bank of Azerbaijan (CBA) dropped by three times to 108.6 million manats ($63.88 million), and net worth surged by 16.5% to 5.811 billion manats ($3.42 billion).
Gunay Bank OJSC, a private Azerbaijani bank whose license was revoked by the Central Bank of Azerbaijan (CBA) on May 16, has been declared bankrupt, Baku Commercial Court decided. The Azerbaijan Deposit Insurance Fund has been appointed as the bank's liquidator. The CBA canceled the license of Gunay Bank OJSC since the total capital of the bank was less than the established requirement - 50 million manats ($29.4 million). The adequacy ratio of the total capital was less than 3% and the bank did not carry out its activities in a prudential manner.
State enterprises in Azerbaijan paid $77M in dividends. In 2022, other incomes to the state budget of Azerbaijan amounted to 546.8 million manats ($321.6 million), of which 130.7 million manats ($76.9 million) were dividends received from state-owned enterprises, according to the annual report on the implementation of the 2022 state budget. According to the document, last year International Bank of Azerbaijan paid 120.5 million manats ($70.9 million), Azerbaijan Caspian Sea Shipping CSC (ASCO) paid 10 million manats ($5.9 million), and Agrarcredit CSC non-bank credit organization (BOKT) transferred 0.2 million manats ($117.6 thousand) to the state budget.
In January-April 2023, 467.53 million manats ($275 million) of insurance premiums were collected in Azerbaijan, up 30.3% from the previous year, the Central Bank of Azerbaijan said. During the reporting period, payments from insurance companies increased by 44.1% to 134.602 million manats ($79.18 million). Thus, for the first four months of 2023, 28.8 manats ($16.94) of insurance premiums were returned to customers for every 100 manats ($58.82) collected in the insurance market. This figure was 26 manats ($15.29) in the same period of 2022.
The number of tourists Azerbaijan received from 168 countries in 2022 was 522,900, 1.6 times more than the previous year, the State Statistical Committee said. Among the tourists, 31.7% came from Russia, 20.9% from Turkey, 8.4% from Iran, 5.5% from Georgia, 5% from India, 2.3% from Pakistan, 2.2% from the UAE, 2% from Kazakhstan, 1.8% from Uzbekistan, 1.7% from Saudi Arabia, 1.6% from each of Ukraine and Belarus, 1.3% from Turkmenistan, 1.2% from Kuwait, and 12.8% from other countries. Men constituted 75.8%, while women comprised 24.2% of the foreigners. Compared to the same period last year, the number of arrivals from China increased by 4.3 times, from India by 42 times, Turkmenistan by 3.8 times, Uzbekistan and Belarus by 3.3 times, Kazakhstan by 2.1 times, Pakistan and Russia by 1.9 times, Great Britain by 1.9 times, the Netherlands by 1.9 times, Israel by 1.8 times, the US by 1.7 times, Oman by 1.6 times, Kuwait by 48.9%, the UAE by 44.5%, Georgia by 43.8%, and Türkiye by 31%. In contrast to a year earlier, the number of tourists from the CIS countries grew by 1.9-fold to 213,400, from EU member states by 1.7 times to 27,600, and from Gulf countries by 4% to 76,200.
A total of 493,100 people traveled abroad from Azerbaijan in January-April 2023, which is 23.2% higher than the same period last year. The number of Azerbaijani citizens who traveled to Russia increased by 1.8 times, to Georgia by 41.6%, to Türkiye by 5.5%, and the number of those who went to Iran decreased by 26.5%. 38.9% of the Azerbaijanis who travelled abroad visited Türkiye, 24.1% visited Russia, 9.4% traveled to Georgia, 7.8% to Georgia, and 19.8% opted for other countries. Men accounted for 69.6%, and women for 30.4% of all those who traveled abroad. 29.5% of Azerbaijani citizens who visited foreign countries in January-April 2023 used railway and car, 67.8% air, and 2.7% sea transport.
In 2022, the average price of one barrel of Azeri Light on the world market was $103.6, reads the annual report on the implementation of the 2022 state budget. According to the document, this was 44.7% more than the average price in 2021, and 21.8% more than the indicator taken as a basis during the revision of the 2022 state budget.
As of May 1, 2023, the overdue loans in Azerbaijan stood at 591.8 million manats ($348.1 million), up 0.2% from the previous month. According to the Central Bank of Azerbaijan, this figure is 0.3% less than in early 2023 and 12.3% less than a year earlier. In the reporting period, the share of troubled loans in the total loan portfolio was 2.8%, while this figure was 2.9% in late March, 2.9% in late 2022, and 3.7% as of April 1, 2022.
Azerbaijan advanced in world ranking in terms of internet speed. In April this year, Azerbaijan ranked 116th among 180 countries in terms of fixed broadband Internet speed with the average download speed of 28.83 Mbps.
