BMI View: Our economic growth outlook on Azerbaijan remains subdued, as the country will remain overwhelmingly dependent on oil and gas revenue for GDP growth. Energy accounts for over 75% of Azerbaijan's exports and 40% of its total economic output. With oil prices set to recover in 2017 and 2018 we expect the government to roll back most of its economic diversification and privatisation plans. In effect, the government will not reduce its footprint in the economy, which will hamper the development of the petrochemicals sector and attract foreign direct investment.
Chemicals and petrochemicals output in Azerbaijan is on a small scale. Until production facilities are upgraded and expanded, we believe it is unlikely that Azerkimya will compete effectively against foreign rivals in both the domestic and export markets. The company owes its existence to state patronage and protection and is plagued by major disruptions to output caused by periodic rapid rises in electricity and raw material costs.