When Russia was hit by an economic crisis in 1998, Azerbaijan was one of the countries affected worst. With Western sanctions set to bring to a halt economic growth in Russia and drive consumer prices high, are we going to be affected again?
Today Russia is among the top five trade partners of Azerbaijan. In 2013, it was our third largest trade partner. The first two were Italy and Indonesia.
In the first eight months of the year, the Commonwealth of Independent States (CIC), including Russia, accounted for 3.67 percent of our exports and 23.34 percent of imports.
From Russia alone, we imported goods worth 428 million manat during the first eight months of 2014. Our exports to Russia during the period were estimated at 791 million manat.
In other words, if the Russian economy crumbles and the prices of Russian goods go up, it will have almost no impact on food prices in Azerbaijan. We will buy less Russian dairy products – our domestic dairy production meets our needs fully. The prices of Russian-made chocolates will grow. But again, we have
our own chocolates that are no inferior to Russian ones when it comes to quality. The same goes for cooking oil.
So, what conclusions do we make of all of these? We need to be careful and not jump into conclusions. Which sections of the Russian economy are going to get hit hard by the Western sanctions? Experts say the banking sector is in a serious situation, predicting a 6.6 percent drop in the profit of 30 largest Russian banks in the first half of the year.
This is a very serious impact. The West is not going to lift the sanctions. On the contrary, they are looking for new ways to pressure Russia. Therefore, the situation in the banking sector may continue to worsen. You do not have to be a skilled economist to predict what kind of consequences it may bring about. A financial crisis usually begins with the fall of a large bank. Smaller banks go bust one after another.
Another serious threat is the falling prices of oil. There has been no sharp drop as yet but experts are sounding alarm bells, saying the prices can plummet to as low as 60-70 dollars a barrel.
If the prices do fall because of the standoff between the West and Russia, Azerbaijan, which heavily relies on income from the sale of oil and natural gas, will certainly be affected.
And, finally, if there is a crisis in Russia, labor immigrants from Azerbaijan will end up in a difficult situation. Many of them support their families back at home.
Bakudaily.Az
