Azerbaijan : economy statistics and industry reports

7%, although the impact of the global financial crisis was less severe than in many other countries in the region.

The current global economic slowdown presents some challenges for the Azerbaijani economy as oil prices remain below their mid-2008 highs, highlighting Azerbaijan's reliance on energy exports and lackluster attempts to diversify its economy.

Azerbaijan's oil production increased dramatically in 1997, when Azerbaijan signed the first production-sharing arrangement (PSA) with the Azerbaijan International Operating Company.

Oil exports through the Baku-Tbilisi-Ceyhan Pipeline remain the main economic driver while efforts to boost Azerbaijan's gas production are underway.

However, Azerbaijan has made only limited progress on instituting market-based economic reforms.

Pervasive public and private sector corruption and structural economic inefficiencies remain a drag on long-term growth, particularly in non-energy sectors.

Several other obstacles impede Azerbaijan's economic progress: the need for stepped up foreign investment in the non-energy sector and the continuing conflict with Armenia over the Nagorno-Karabakh region.

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 oil and gas pipelines in the region, and Azerbaijan's ability to manage its energy wealth to promote sustainable growth in non-energy sectors of the economy and spur employment.