Owing to significant increases in oil production, the economy of Azerbaijan achieved rapid GDP growth averaging 28% between 2005 and 2007; but at the same time GDP growth in the non-oil sector was around 10%. To maintain stable development of the oil-dependant Azerbaijan economy, proper monitoring and accurate economic forecasting are essential for macroeconomic policymaking.
To this end, this project was aimed at improving the research capacity of Azerbaijan experts in the field of economic forecasting and analyzing objective economic conditions of the country.
For three years beginning in fiscal 2005, with the support of experts from East Asian countries, researchers at the Center for Economic and Business Research and Education (CEBRE), Khazar University, observed economic trends and determined basic indicators of macroeconomic development, based on which forecast models were built that followed Azerbaijan's economic conditions.
In the first and second years, training seminars and overseas observation tours pertaining to macroeconomic monitoring were conducted with the cooperation of the Malaysian Institute of Economic Research.
In fiscal 2007, CEBRE researchers constructed short-term forecasts and developed a mid-term forecasting model. In June and December 2007, 200 businesses and 800 households throughout the country were interviewed to conduct semiannual business trend surveys and consumer sentiment surveys. To determine and develop a mid-term forecasting model, a retrospective analysis of Azerbaijan's economic situation over the last 15 years was conducted.
Also, in June two CEBRE researchers visited the Korea Development Institute, where they learned about macroeconomic monitoring in South Korea and exchanged views regarding the development of mid-term economic forecasting models. An intensive seminar was held at Khazar University in August, where the Deputy Commissioner of the Korean National Assembly Budget Office and Sang Myung University Professor Baek Ehung-Gi presented his views and recommendations.
As a result of these activities, macroeconomic forecasts for 2008-11 were developed and compared with the models built by the International Monetary Fund and the government. The results of the project's research were published in Azerbaijan's major newspapers and economic journals and also presented at the final conference on February 9, 2008.