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The Week in the Neighbourhood

Madona Gasanova

04.06.23 08:00 175 ნახვა

“The Century of Turkey has begun, and the doors of our country's growth have been opened," President Recep Tayyip Erdogan said at his inauguration ceremony at the presidential complex. Earlier, Erdogan took his renewed oath of office as Turkey's president. Turkey went to the polls on May 28 for a presidential runoff after no candidate secured more than 50% of the vote needed for an outright victory in the first round on May 14. Erdogan won the race with 52.18% of the vote, while opposition candidate Kemal Kilicdaroglu got 47.82%, according to official results. The number of Armenia's citizens who are opposed to their country’s membership in the Russia-led Eurasian Economic Union (EEU) is on the rise. The Azerbaijani government is increasing the defense and national security expenditures by 1.105 billion manats ($0.65 billion).

Here is a rundown of the latest economic, business and political developments around Georgia's neighboring Turkey, Azerbaijan and Armenia during the last week.


Turkish President Recep Tayyip Erdoğan declared victory Sunday in a historic runoff that posed the biggest challenge to his 20 years of polarizing rule.

With the “Century of Turkey” started, the path to the rise of Turkey is now before us, President Recep Tayyip Erdogan said on Saturday, June 3. "Turkey entered a new path after the casting of votes ended and the results were announced. The Century of Turkey has begun, and the doors of our country's growth have been opened," Erdogan said at his inauguration ceremony at the presidential complex, with the attendance of high-level officials from 81 countries.

The victory of Erdogan has not been “welcomed” by country’s national currency lira, which sank first on Monday and was trading at 20.44 against the greenback and later on Tuesday, trading at 20.29 against the greenback, surpassing Monday’s lows. The lira has lost more than 7% of its value since the start of the year. “We have a pretty pessimistic outlook on the Turkish Lira as a result of Erdogan retaining office after the election,” Wells Fargo’s Emerging Markets Economist and FX Strategist Brendan McKenna said.

Turkey's natural gas imports in March witnessed a significant decline of 26.6% compared to the same period last year, totaling approximately 4.557 billion cubic meters (bcm); meanwhile, the country’s oil purchases were up in the same period. According to the latest "Natural Gas Market Sector Report" by the Energy Market Regulatory Authority (EPDK), imports were predominantly sourced via pipelines, amounting to roughly 3.70 bcm, while liquefied natural gas (LNG) facilities contributed an additional 1.487 bcm. Within this timeframe, pipeline imports experienced a decrease of 27.7%, whereas LNG imports saw a decline of 24.5%. Among the countries supplying natural gas to Turkey, Russia held the highest share with 1.428 bcm in March. Following closely were Azerbaijan with 922 million cubic meters (mcm) and Iran with 916 mcm. While natural gas imports from Russia decreased by 48.2%, imports from Azerbaijan increased by 21.2%, and imports from Iran increased by 25.8%.

Turkey’s economy have expanded 4% in the first quarter, official data showed Wednesday, with growth reined in by the impact of February's earthquakes in the country's south. GDP increased by 84.4% and reached 4,631,792,000, 000 TRY at current prices. GDP realized 245,464,000,000 US Dollars in the first quarter of 2023, Turkish Statistical Institute, TurkStat says.

Turkey’s economic confidence index in May rose to the highest level in the last 20 months, official data showed, maintaining an upward trend after a slight fall in February following massive earthquakes. The index rose 1.4% to 103.7 in May on a monthly basis. It fell slightly in February to 99.1 points, following the tremors that devastated the country's southern region, killing over 50,000 people.

Turkey's exports rose 14.4% year-over-year to $21.7 billion, marking the best May ever, the country's trade minister said. "This is the highest May export value of all time. Our exports will continue to be the driving force of growth," Mehmet Muş said. Imports rose 16% year-over-year to $34.3 billion, the official data showed. Foreign trade deficit jumped 19% from a year ago to $12.7 billion. In January-May, outbound shipments rose 0.2% versus the same period a year ago to $102.5 billion. Imports increased 8.9% to $158.6 billion, the data showed. The foreign trade gap rose by nearly 30% year-over-year to $56.1 billion.

Last year the volume of trade between Turkey and Russian topped $62 billion, said Yury Pilipson, director of the 4th European Department of the Russian Foreign Ministry. “This is the result of joint efforts of the governments, relevant departments, and economic entities of the two countries. It is important that the potential of our partnership remains significant to achieve new horizons," he stressed.


Armenian tax revenues in April 2023 break historical record - Prime Minister Nikol Pashinyan says. "In April 2023, tax authorities collected 296.8 billion drams ($771 million), which is a record indicator in the history of Armenia as that much of taxes has never been collected in one month. For example, in April 2022 we collected 231.3 billion drams ($601 million), and in April 2018 – some 126 billion drams ($327 million). In other words, compared to April 2018, tax revenues collected in one month have more than doubled," the Prime Minister emphasized.

A foreign tourist spent $1, 200 on average in Armenia, Economy Minister Vahan Kerobyan said speaking at a discussion on Armenia's 2022 state budget execution in parliament.

In April 2023, Armenia broke another record in terms of the number of officially registered jobs, which stood at 710,150, Prime Minister Nikol Pashinyan said.

Armenia ranked fourth in the world in terms of economic growth in 2022, which amounted to 12.6%, Economy Minister Vahan Kerobyan reiterated when speaking at a discussion on the state budget 2022 execution in parliament. "The highest growth in the world was posted by Guyana, where oil production started in 2022 and the economic growth surged by 57%. Second and third were Fiji and St. Lucia, where growth was about 13-14 percent, mostly as a result of the resumption of tourism," he said. Kerobyan noted that Armenia was followed by Ireland and Georgia. According to official statistics, Armenia's economic growth was 12.6% in 2022. GDP per capita rose from $4,679 in 2021 to $6,569.

Armenia's state debt to GDP ratio dropped to 46.7% in 2022, Prime Minister Nikol Pashinyan said in the parliament. According to Armenia's National Statistical Committee, the country's aggregate state debt stood at about $10.9 billion as of March 31, 2023, an increase of $141.9 million from February 28, 2023. On December 31, 2022, the state debt was over $10.6 billion.

Armenian agricultural sector declined by 0.7% in 2022.

A preferential trade agreement between the Eurasian Economic Union (EEU) and China may have a negative impact on Armenia's GDP, according to a report, released by the Russian Council on Foreign Affairs. The report notes that in view of the breakdown of Russia's trade ties, one of the steps to ensure economic growth is the reorientation of Russian exports to new markets. However, the report adds that it is necessary to take into account how the change in trade flows will affect the economies of Russia's partners in the EEU, and what measures should be taken to compensate for possible negative consequences. For example, in case of a preferential trade agreement between the EEU and China, Kazakhstan's GDP may grow in absolute terms by $1 billion annually (+0.56%), that of Russia – by $3.7 billion (+0.22%), but according to WABT138 estimates losses of Armenia may reach $26 million (-0.19%), those of Belarus - $410 million (-0.65%) and losses of Kyrgyzstan - $12.7 million (-0.15%).

The number of Armenia's citizens who are opposed to their country’s membership in the Russia-led Eurasian Economic Union (EEU) is on the rise, according to a report released by the Russian Council on Foreign Affairs. Citing the findings of regular surveys conducted by the Caucasus Barometer, the report says the number of opponents to Armenia’s membership in EEU has grown to ‘alarming’ 14%, while according to surveys conducted in 2019 and 2017 their number was 3% and 5%, respectively. At the same time, the number of people who support the membership in one way or another remains virtually unchanged.

Armenia will build new border crossing point at the Iran border. Ground for the new facility was broken on June 2 in a ceremony attended by Chairman of the State Revenue Committee Rustam Badasyan, Head of the Yerevan Office of the European Bank for Reconstruction and Development George Akhalkatsi, Syunik Governor Robert Ghukasyan, representatives of international structures and other state bodies. The reconstruction and modernization of the Meghri border crossing point is being carried out with credit and grant funds provided by the EU and the EBRD. Armenia and EBRD signed an agreement on loan of 21,146,263 euros on February 7, 2020.


Allocations to reserve funds from the state budget of Azerbaijan for 2023 are reduced by AZN190.5m ($112.1m) or 31.2% from AZN610m ($359m) to AZN419.5m ($247m).

Voluntary insurance market grows by 28% in Azerbaijan. 38% growth has been recorded by compulsory insurance market. As for life insurance, the market grew by 34%.

In the last 2 months, 120,125 tons of cargo were transported from Iran to Azerbaijan by rail, up 81% from the previous year.

Revenues, expenses of Azerbaijan's state budget increases by over $1.7B. The forecast for revenues of the state budget of Azerbaijan for this year has been increased from 30,773,978,000 manats ($19.843 billion) to 33,779,500,000 manats ($19.847 billion), and the forecast for expenditures went up from 33,353,278,000 manats ($19.602 billion) to 36,568,800 manats ($21.484 billion), according to the country’s Finance Ministry. Thus, budget revenues increased by 3,005,522,000 manats ($1.765 billion) or 9.7%, and budget expenditures went up by 3,215,522,000 manats ($1.889 billion) or 9.6%.

The deficit of the revised 2023 state budget of Azerbaijan is increased by 210 million manats ($123.4 million) to 2.789 billion manats ($1.639 billion), the Ministry of Finance said. The financing of the increase in the deficit will be provided through domestic borrowing and additional revenues from privatization. The ratio of the deficit to the forecasted gross domestic product for late 2023 will be 2.5%.

Azerbaijan posted nearly 14% growth in gas exports to Turkey.

According to the results of January-April 2023, non-oil exports from Azerbaijan amounted to $1.2 billion, which is 21.2% more than the same period in 2022. The main volume of exports was shared by electricity - $313.7 million (an increase of 9.4 times), tomatoes - $54.2 million (a decrease of 6.9%), hazelnuts - $47.2 million (a decrease in by 1.5%), gold - $44.6 million (a decrease of 6.7%), polypropylene of the primary form - $44.2 million (an increase of 16.6%), raw cotton - $38.3 million (a decrease of 62.6%), methanol - $31 million (down 38.7%), carbamide - $30.3 million (down 55.6%), primary form polyethylene with a specific gravity of more than 0.94 - $29.1 mln (up 2.7 times). The top five importing countries of Azerbaijani non-oil products are: Turkey - $405.4 million (an increase of 21.5%), Russia - $285.2 million (an increase of 48.8%), Georgia - $142.6 million (an increase of 21.5%). 2.3 times), Switzerland - $49.2 million (down 3.5%), Kazakhstan - $34.5 million (up 2.6 times). Thus, Turkey accounted for 33.8%, the Russian Federation - 23.8% of exports of non-oil products. According to the Ministry of Economy, by 2027 the volume of non-oil exports will increase to $5 billion.

The Azerbaijani government is increasing the defense and national security expenditures by 1.105 billion manats ($0.65 billion), including spending on special defense projects and measures by 1 billion manats ($0.59 billion). After the increase, the spending on special defense projects and measures will reach 3.070 million manats ($1.22 billion).

So far, 484 million tons of the 654 million tons of oil produced in Azerbaijan have been exported to world markets through the Baku-Tbilisi-Ceyhan pipeline, the first vice-president of the State Oil Company of Azerbaijan (SOCAR) Khoshbakht Yusifzadeh said. According to him, the Azeri-Chirag-Guneshli (ACG) oil and gas field block, located in the Azerbaijani sector of the Caspian Sea, produced 573 million tons of oil from the date of becoming operational till May 1, 2023. "208 billion cubic meters of gas have been produced from the field block. More than 340 million tons of oil produced in the ACG fell to the share of Azerbaijan's profit oil."
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