Oil Money vs. Economic Crisis: The Case of Azerbaijan

The effect of the global financial crisis on Azerbaijan’s economy is an interesting case study, particularly because it is a small CIS (Commonwealth of Independent States) transition country strongly dependent on oil exports. In fact, oil constitutes about half of the country’s GDP. Azerbaijan’s economy was mostly affected by a drop in oil prices. As a result, there were three direct channels by which the global crises influenced the Azerbaijani economy:

• Fall in oil prices;
• Fall in external demand for Azeri non-oil products;
• Outflow of foreign capital.