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Overall FDI growth signals interest of foreign investors in Azerbaijan's economic prospects

29 March 2024 19:33 (UTC+04:00)
Overall FDI growth signals interest of foreign investors in Azerbaijan's economic prospects
Ulviyya Shahin
Ulviyya Shahin
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In 2023, the oil and gas sector's contribution to foreign direct investments (FDI) in Azerbaijan's economy amounted to 69.9%, Azernews reports, citing the Central Bank of Azerbaijan.

This indicates a slight decrease from the 71% share observed in 2022.

The FDI influx into Azerbaijan's economy witnessed a growth of 6.3% in 2023 compared to the preceding year.

This data underscores a notable trend in the diversification of investment sources within Azerbaijan's economic landscape. While the oil and gas sector remains a significant contributor to foreign investments, there appears to be a gradual shift towards broader sectors or alternative industries. This shift aligns with the nation's efforts to diversify its economy and reduce dependency on oil and gas revenues, thereby promoting sustainable growth and resilience in the face of market fluctuations.

The decrease in the oil and gas sector's share of FDI could be attributed to several factors, including changes in global energy markets, evolving investment strategies by foreign entities, and domestic policies aimed at attracting investments in non-energy sectors.

Furthermore, the modest increase in overall FDI signals continued interest and confidence from international investors in Azerbaijan's economic prospects. This growth is indicative of the country's stable investment climate, strategic location, and ongoing reforms to enhance business competitiveness and attractiveness.

In response to these developments, policymakers may seek to further encourage investment diversification by implementing targeted measures to attract capital into non-energy sectors, foster innovation, improve infrastructure, and enhance the ease of doing business.

Overall, while the oil and gas sector remains pivotal to Azerbaijan's economy, the evolving landscape of foreign investments reflects a broader vision for sustainable development and economic resilience, underscoring the importance of fostering a diversified and dynamic investment environment.

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