The Central Bank announced the indicators of foreign direct investments attracted to the economy of Azerbaijan and directed to foreign countries in 2022.
Fakt Yoxla analyzed the indicators related to the investments made in Azerbaijan, as well as the investments made by Azerbaijan based on those indicators.
Investments made in Azerbaijan
The Central Bank reports that the total value of direct foreign investments in Azerbaijan in 2022 was equal to 6 billion 276 million dollars. This is a 31% increase compared to 2021.
Table 1: Foreign investments attracted to Azerbaijan in the last 5 years
One of the main reasons for the increase in 2022 is related to the 10-fold increase in the volume of investments from Russia to Azerbaijan during the year. So, the volume of investments from Russia to Azerbaijan was equal to 51 million dollars in 2021 and 518 million dollars in 2022. In other words, investments from Russia to Azerbaijan have increased by almost half a billion dollars over the past year. It should be noted that after the beginning of the Russian-Ukrainian war, in addition to foreign investments, money transfers sent from Russia to Azerbaijan, as well as the amount of funds kept by citizens of foreign countries in Azerbaijani banks, have also sharply increased.
Table 2: Countries investing the most in Azerbaijan in 2022
As can be seen from the table, the volume of investments attracted to Azerbaijan from only three of the top ten countries in terms of the volume of investments in Azerbaijan - Japan, the USA, and Norway - has relatively decreased compared to 2021. Another noteworthy point is that almost half of the foreign investments in the country belong to only two countries - Great Britain and Turkey. The share of these two countries in foreign investments is 47%.
In recent years, continuous increases in the volume of Turkish investments in Azerbaijan have been observed. In 2020, investments from Turkey to Azerbaijan amounted to 577 million dollars, in 2021 - to 740 million dollars, and in 2022 - to 1 billion 187 million dollars.
In addition to the fact that half of the foreign investments invested in Azerbaijan belong to only two countries, another indicator of concentration is related to the field distribution of foreign investments. So, 71% of foreign investments in Azerbaijan in 2022 were directed only to the oil and gas industry. In this regard, there is a big difference between the oil and gas industry and other sectors in the distribution of foreign investments attracted to the country according to the sector structure.
Investments made by Azerbaijan
It is clear from the official figures that in 2022, the total volume of investments directed by Azerbaijan to foreign countries was equal to 1 billion 153 million dollars. In 2021, this indicator was equal to 826 million dollars. That is, during 2022, the volume of investments made by Azerbaijan to foreign countries increased by 327 million dollars or 40%. However, let's also note that although the volume of investments made by Azerbaijan to foreign countries in 2022 has increased sharply, it still remains low compared to the period before the pandemic.
Table 3: The volume of investments made by Azerbaijan in foreign countries in the last 5 years
The country to which Azerbaijan invested the most in 2022 was Turkey with 247 million dollars. This made up 21.4% of Azerbaijan's foreign investments. However, Azerbaijan's investments in this country decreased by approximately 34 million dollars compared to 2021. The other two countries in the top three, the UAE and Australia, were not in the leading positions in terms of the volume of foreign investments in previous years, and investments in these countries increased sharply in 2022. Investments in Great Britain and Georgia, which are among the countries where Azerbaijan always invests, have decreased compared to 2021.
It is clear from the indicators related to foreign direct investments attracted to the economy of Azerbaijan and directed to foreign countries in 2022 that there was a sharp increase in the volume of investments made in Azerbaijan in 2022. About 90 percent of this growth was due to increased investments from only three countries - Russia, Cyprus, and Turkey. On the other hand, most of the investments in Azerbaijan continue to be directed to the oil and gas industry. In this regard, the interest of foreign investors in the non-oil sector is lower. Although Azerbaijan's investments in foreign countries have increased by 40 percent compared to the previous year, they still have not reached the level before the pandemic.