Economic diversification in Azerbaijan.
Speaking at the Asian Development Bank's annual board of governors meeting in Baku in early May, President Ilham Aliyev said low world oil prices had led the government to implement across-the-board cost-cutting measures to balance the budget. While Azerbaijan has always sought to reduce its dependence on the energy sector, both oil and natural gas exports will continue to be the backbone of economic growth, he declared. Diversifying the national economy away from hydrocarbons towards higher value-added industries and services remains the government's long-term key priority. However, it faces multiple structural challenges.
Azerbaijan's exposure to the neighbouring Russian market will be below average.
However, it will continue to be affected by its economic crisis, particularly in terms of migrant remittance flows.
The government's capital spending cuts will have direct negative consequences for the downstream sector, regarded as a strategic objective.
