Azerbaijan's market opportunities will be constrained by the relatively small size of the population and low-albeit gradually rising-levels of consumption per head, Economic Intelligence Unit said.
Real wage growth will compare favourably with other emerging east European countries, but will be significantly below that recorded in the previous decade.
The Economist Intelligence Unit expects that real wage growth will average 4% per year in 2014-18, compared with 4.4% in 2009-13 and 14.9% in 2004-08. Wage inequality is also significant. There remains a large difference between the wages paid to state employees and those paid to private-sector employees by foreign firms. Salaries in the mining, financial and tele-communications sectors are four to five times above the weighted average for the whole economy, whereas earnings in the agricultural sector are half that figure.
GDP per head at market exchange rates was US$7,861 in 2013, behind Russia (US$14,690) and Kazakhstan (US$12,645) among oil producers, and the average for eastern Europe (US$11,210).
However, it is well ahead of Azerbaijan's neighbours Armenia (US$3,500) and Georgia (US$3,591). Adjusting for purchasing power parity (PPP), GDP per head was an estimated US$14,057 in 2013.
Our forecasts for 2014-18 suggest that Azerbaijan's relative position will remain unchanged, although it will make some gains vis-à-vis Russia as growth will be higher, inflation lower and its currency will remain pegged to the dollar. The shadow economy is still believed to be large, which means that the purchasing power of consumers-and their demand for consumer goods-could well be considerably underestimated.
Bakudaily.Az
