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Azerbaijan Economic Dislocations
The general economic dislocations within the Soviet Union in
the late Gorbachev period hurt Azerbaijan by weakening
interrepublic trade links. After the breakup of the Soviet Union,
trade links among the former republics weakened further.
Azerbaijani enterprises responded by establishing many new trade
ties on an ad hoc basis. Although some moves were made toward a
market economy, state ownership of the means of production and
state direction of the economy still dominated in early 1994.
Despite the economic turmoil caused in 1992 and 1993 by the
demise of the Soviet Union and the conflict in Nagorno-Karabakh,
the Azerbaijani economy remained in better condition than those
of its neighbors Armenia and Georgia and some of the Central
Asian states. According to estimates by Western economists, gross
industrial production plunged at least 26 percent in 1992 and 10
percent in 1993.
In 1992 poor weather contributed to a decline in production
of important cash crops. Crude oil and refinery production
continued a recent downward spiral, reflecting a lack of
infrastructure maintenance and other inputs. Inflation took off
in early 1992, when many prices were decontrolled, and
accelerated throughout the year, reaching an annual rate of 735
percent by October. Inflation for 1993 was estimated at 1,200
percent, a figure exceeded only by rates for Russia and a few
other CIS states. Officials tried unsuccessfully to protect the
standard of living from inflation by periodically increasing wage
payments and taking other measures. In his New Year's message in
January 1994, Aliyev acknowledged that during 1993 Azerbaijan had
faced a serious economic crisis that led to further declines in
the standard of living, but he promised that 1994 would witness
positive changes.
Data as of March 1994
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