LOCAL ECONOMIC DEVELOPMENT PLAN FOR TBILISI ... - LED

system was privatized in 2002. Armenia's severe trade imbalance has been offset
somewhat by international aid, remittances from Armenians working abroad, and foreign
direct investment. Economic ties with Russia remain close, especially in the energy
sector. The government made some improvements in tax and customs administration in
2005, but anti-corruption measures will be more difficult to implement. Investment in the
construction and industrial sectors is expected to continue in 2006 and will help to ensure
annual average real GDP growth of about 13.9%.
Population: 7,961,619 (July 2006 est.)
Age structure:
0-14 years: 25.8% (male 1,046,501/female 1,011,492)
15-64 years: 66.3% (male 2,573,134/female 2,706,275)
65 years and over: 7.8% (male 246,556/female 377,661) (2006 est.)
GDP
GDP - purchasing power parity - 47.03 billion USD
GDP - official exchange rate - 12.56 billion USD
GDP - per capita (PPP) - 4,890 USD
population below poverty line - 49 %
Budget – gov. (2005)
Revenues: 3.18 billion USD
Expenditures: 2.986 billion USD
Inflation rate 0,6 %
Unemployment rate 1.1% official rate (2005)
Azerbaijan's number one export is oil. Azerbaijan's oil production declined through 1997,
but has registered an increase every year since. Negotiation of production-sharing
arrangements (PSAs) with foreign firms, which have thus far committed $60 billion to
long-term oilfield development, should generate the funds needed to spur future industrial
development. Oil production under the first of these PSAs, with the Azerbaijan
International Operating Company, began in November 1997. A consortium of Western oil
companies is scheduled to begin pumping 1 million barrels a day from a large offshore
field in early 2006, through a $4 billion pipeline it built from Baku to Turkey's
Mediterranean port of Ceyhan. Economists estimate that by 2010 revenues from this
project will double the country's current GDP. Azerbaijan shares all the formidable
problems of the former Soviet republics in making the transition from a command to a
market economy, but its considerable energy resources brighten its long-term prospects.
Baku has only recently begun making progress on economic reform, and old economic
ties and structures are slowly being replaced. Several other obstacles impede
Azerbaijan's economic progress: the need for stepped up foreign investment in the nonenergy
sector, the continuing conflict with Armenia over the Nagorno-Karabakh region,
and the pervasive corruption. Trade with Russia and the other former Soviet republics is
declining in importance while trade is building with Turkey and the nations of Europe.
Long-term prospects will depend on world oil prices, the location of new pipelines in the
region, and Azerbaijan's ability to manage its oil wealth.