Azerbaijan’s ailing construction industry set to surge after Nagorno-Karabakh victory

An analysis by economic consultant Global Data has found that Azerbaijan’s construction industry, which has declined for three straight years, is likely to rebound in 2021 with 9.1% growth, followed by a steady increase of around 4.4% during the following four years.

The construction sector in Azerbaijan has been hit by the collapse in oil prices, the pandemic and the 44-day war with Armenia over Nagorno-Karabakh at the end of last year. It declined 15.2% in 2020, 6.1% in 2019 and 8.8% in 2018.

The rebound, if it occurs, is likely to be driven by a $1.3bn rebuilding effort for the part of Nagorno-Karabakh regained by Azerbaijan in the conflict.

The Azerbaijani State Agency of the Roads announced last year that it will repair or rebuild 2,661km of roads.

The Azerbaijani government also plans to invest $14.5bn in the oil and gas sector between 2021 and 2024, and increase the total share of renewable energy to 30% over the next decade.

Danny Richards, GlobalData’s lead economist, 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."

Image: Construction in Baku, Azerbaijan (Irinabal18/Dreamstime)

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