AZE.US
Azerbaijan’s economy has effectively stopped growing, while prices continue to rise and household incomes are under pressure, economist and REAL Party Political Committee chairman Natig Jafarli said on the YouTube channel Pozan Media.
According to Jafarli, the country’s economic growth has weakened sharply since the pandemic. He said growth stood at around 1 to 1.5 percent in recent years, while in the first five months of this year the economy showed virtually zero growth.
“Income is falling, but prices are not standing still,” he said.
Jafarli argued that the pressure on households is visible in the structure of everyday spending. He said official figures show that around 50 percent of citizens’ monthly expenses go to food, about 15 percent to utilities and more than 5 percent to medicine and healthcare. In practice, he said, about 70 manats out of every 100 are spent on food, utilities and health-related costs.
The economist described this as a sign of poverty, noting that in developed economies the share of food spending in household budgets is much lower.
Jafarli also criticized the government’s tax and penalty policy. He said the authorities are trying to compensate for weaker budget revenues by increasing taxes, duties, fines and license fees, but this only puts more pressure on citizens and businesses.
“The problem is not that the budget is receiving less money. That is the result. The reason is that the economy is shrinking,” he said.
He added that Azerbaijan’s small business sector remains too weak. According to him, small businesses account for only about 7 percent of budget formation, while in neighboring Georgia small and medium-sized businesses form the backbone of the economy.
Jafarli warned that possible cuts in the public sector could create serious social risks if the private sector is not able to absorb those workers.
He said about 880,000 people in Azerbaijan work in organizations financed from the state budget, calling this a very high figure for a small country. However, he stressed that layoffs alone cannot solve the problem.
“The mistake is to cut people first and think later. The private sector is suffocating. A person may lose a job in the public sector and then fail to find work in the private sector,” Jafarli said.
According to him, the government should simplify the tax system, reduce pressure on businesses and create conditions for the private sector to generate new jobs instead of expanding control and penalties.
AZE.US