Research report from GlobalData says infrastructure and oil and gas investment to drive sector’s recovery

A report from research and analysis company GlobalData indicates that the construction industry in Azerbaijan will grow by 9.1% over the course of 2021.

While the industry’s output was said to have shrunk by 15.2% in real terms last year, the Construction in Azerbaijan – Key Trends and Opportunities to 2025 report reveals that investments in the infrastructure and oil and gas sectors will drive a significant rebound.

According to GlobalData, the country’s government is expected to invest AZN24.7 billion (€12.1 billion) in its oil and gas industry over the next four years.

While the Azerbaijani government is due to pump AZN6.7 billion (€3.2 billion) into the sector this year, it has also established plans to drive growth in other areas.

Danny Richards, lead economist at GlobalData, said, “The government’s plan to strengthen its non-oil sectors through an increase in Foreign Direct Investment (FDI) will also attract investments in the infrastructure and industrial sectors in the short and medium term. The government plans to increase the share of non-oil FDI from 2.6% of GDP in 2017 to 4% by 2025.”

GlobalData’s new report brings new hope to the country’s construction industry, which also declined by 6.1% and 8.8% in 2019 and 2018 respectively, after it was further impacted by the events of last year.

In addition to the “dual shock” created by the Coronavirus and a collapse in oil prices, 2020 also saw the country suffer a violent conflict with Armenia.

In September of last year, a longstanding dispute over the Nagorno-Karabakh enclave reignited, resulting an armed battle between the two ex-Soviet nations. While a truce was brokered by Russia after 44 days, the war is reported to have cost several thousand lives.

Richards said, “Following the signing of the peace deal between Armenia and Azerbaijan over the disputed territory of Nagorno-Karabakh, the government is targeting increased investments in the liberated region.

“The 2021 budget includes an allocation of AZN2.2bn (US$1.3bn) for the restoration and reconstruction of the liberated territories. These funds will be used to restore infrastructure in the road, electricity, gas, water, communication, education and healthcare sectors, along with the restoration of cultural and historical monuments.”