Both Oil Fund and political importance grow
Overview:
High energy prices and significant increases in both oil and gas extraction have generated rapid growth in Azerbaijan, massive capital account surpluses and the rapid accumulation of an Oil Fund worth fully 20% of GDP. While growth and the current account surplus have both moderated this year, the economy is still growing at a decent pace and, therefore, performing much better than its peers in the region. Azerbaijan, however, still remains incredibly reliant on the energy sector despite efforts to diversify the economy. This structural economic issue is likely to be long-lasting as huge new energy resources1 are due to come on-stream in the next decade. These new resources, however, also give the country an extremely important geo-political role as Nabucco and South Stream compete for future gas exports.