Driving Economic Growth: Analysis Of Increased Investments In Fixed Capital In Azerbaijan

(MENAFN- AzerNews)
Driving Economic Growth: Analysis Of Increased Investments In Fixed Capital In Azerbaijan Image
Ulviyya Shahin Read more

In the months of January-February of the year 2024, investmentsin fixed capital in Azerbaijan amounted to 2638.1M manats($1551.82M), which is 15.5% higher compared to the correspondingperiod of the previous year.

According to Azernews citing the State Statistics Committee, thevolume of investments in the oil and gas sector has increased by12.5%, while investments in non-oil and gas sectors have increasedby 17.1%.

Of the utilized investment, 1439.7M manats ($846.88M) (54.6%)were allocated to manufacturing sectors, 1064.7M manats ($626.29M)(40.3%) to service sectors, and 133.7M manats ($78.65M) (5.1%) toresidential construction. Domestic investments accounted for2121.3M manats ($1247.82M) (80.4%) of investments in fixed capital.1921.3M manats($1130.18M) (72.8%) of investments in fixed capitalwere directly spent on construction and installation works.

The increase in investment directed towards fixed capital inAzerbaijan, particularly during the months of January-February2024, signifies several positive indicators for the economy.

One of the positive indicators for the economy is economicgrowth. The rise in investments in fixed capital suggests a growingconfidence in the economy, as businesses and investors are willingto commit resources to long-term projects. This increase of 15.5%compared to the previous year indicates a momentum toward economicexpansion.

The other one is diversification. The fact that investments innon-oil and gas sectors have increased by 17.1% is particularlynoteworthy. It suggests a diversification strategy, with theAzerbaijani economy moving away from over-reliance on the oil andgas industry towards other sectors. This diversification is crucialfor long-term sustainability and resilience against fluctuations inglobal commodity prices.

The main positive indicators for the economy is sectoralallocation. The allocation of investments across various sectorsprovides insights into the priorities of the Azerbaijani governmentand private investors. The substantial portion allocated tomanufacturing sectors (54.6%) indicates a focus on industrialdevelopment, which can stimulate job creation, technologicaladvancement, and export potential. Similarly, significantinvestments in service sectors (40.3%) underline the importance ofservices in driving economic activity and catering to domesticdemand.

Domestic Investment is another positive indicator for theeconomy. The dominance of domestic investments, accounting for80.4% of total investments in fixed capital, reflects confidenceamong local investors in the domestic economy. This could indicatea favorable business environment, government policies supportive oflocal entrepreneurship, and reduced reliance on externalfinancing.

Construction Sector is the positive indicator for the economy,as well. The sizable portion of investments (72.8%) directedtowards construction and installation works highlights theimportance of infrastructure development and real estate in drivingeconomic growth. This not only creates immediate employmentopportunities but also lays down the groundwork for future economicactivities and urban development.

Generally, the increase in investment directed towards fixedcapital in Azerbaijan during the mentioned period portrays apositive outlook for the economy, characterized by diversification,sectoral growth, and a strong emphasis on domestic investment andinfrastructure development. However, continued efforts to maintaineconomic stability, enhance competitiveness, and foster innovationwill be essential for sustaining this positive trajectory in thelong run.



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