Baku City Review

Cities

About This Report

Mar 2017

Baku, the capital of Azerbaijan, is the complete powerhouse of Azerbaijan's national economy. The natural resources-rich city accounted for 76% of Azerbaijan's total gross domestic product in 2016. The city benefits from oil wealth, with 60% of its USD26 billion GVA being generated by mining and manufacturing activities. However, due to vulnerability of changes in oil prices, this share is falling every year. Baku's necessity to diversify its economy stands as a top priority.

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Baku City Review

BAKU HIGHLIGHTS

Azerbaijan's economy is greatly reliant on its capital, Baku, which is responsible for 76% of national GDP as of 2016. Being the major centre of oil-related logistical activities increases Baku's labour productivity, with the GVA produced per employee 12 times higher in the city than in the rest of the country.

Labour productivity advantage does not fully translate into paid salaries

As in many oil-dependent cities, Baku's labour productivity advantage does not fully translate into the paid-out wages. In 2016 disposable income per household stood at USD11,200 per year, which was 3.2% less compared with the rest of Azerbaijan.

Lower spending levels

Baku's average per household spending level (excluding housing and transport) was less than of the rest of Azerbaijan by 7.4% in 2016. The most prominent categories, where the population of Baku spent less than the rest of the country, were household goods and services (49% less spending) and alcoholic beverages and tobacco (-34%).

High housing and transport expenses  

In 2016 expenditure on housing and transport was 26% greater in Baku compared to the rest of the country. With the disadvantage of 3% in disposable income this makes the city quite unaffordable. While expenditure on housing was 5% greater in Baku, transport expenditure per household experienced the biggest difference, with 54% more expenses in Baku than in the rest of the country.

Baku City Review

BAKU REVIEW AT A GLANCE

Understanding Baku Review structure
Chart 1 Overview
Key facts on Baku
Summary 1 Key Facts On Baku 2011, 2016, 2021

BAKU HIGHLIGHTS

History
Delimitation of the metropolitan region
Chart 2 Map Of Baku Metropolitan Area
Main business districts

ECONOMY OF THE CITY

Industrial make-up
Chart 3 Industrial Composition Of Baku 2016
Chart 4 Labour Productivity: Selected Cities 2016
Recent developments and outlook
Chart 5 Dynamics Of Real GDP In Baku, Azerbaijan And Other Cities In CIS, 2011-2021
Summary 2 Labour Market Changes In Baku 2011, 2016

CONSUMER PROFILE

City demographics
Chart 6 Population By Age 2016
Chart 7 Drivers Of Population Growth In Baku 2011-2016
Household income
Chart 8 Household Distribution By Income In Baku 2016 And 2021

CONSUMER EXPENDITURE

Structure of household budget
Chart 9 Comparison Of Household Expenditure In Baku And Azerbaijan, 2016
Summary 3 Baku Household Budget Structure By Consumer Expenditure Item, % of total, 2011, 2016, 2021
City lifestyle
Extra Expenditure On Tourism Brings Extra Income To Baku
Communication Initiatives To Boost Internet Ownership
City affordability
Housing
Chart 10 Household Expenditure On Housing: Selected Cities 2016
Transport
Chart 11 Household Expenditure On Transport: Selected Cities 2016

DEFINITIONS

APPENDIX

Summary 4 GDP Development, 2011, 2016, 2021
Summary 5 GDP By Origin, Current Prices, US$, Million, 2011-2016
Summary 6 Population And Labour Force, 2011-2016
Summary 7 Employed Population By Economic Sector, % of total, 2011-2016
Summary 8 Population By Sex And Broad Age Groups, ‘000, 2011-2016
Summary 9 Population Growth, 2011-2016
Summary 10 Forecast Population Growth
Summary 11 Population By Educational Attainment, 2011-2016
Summary 12 Structure Of Consumer Expenditure By Main Category, 2011-2016
Summary 13 Consumer Expenditure By Main Category, Per Household, Constant (2016) Prices, US$, 2011, 2016, 2021
Summary 14 Households By Income Band, % Of Total, Constant (2016) Prices 2011, 2016, 2021
Summary 15 Households By Income Band, ‘000, Current Prices 2011-2016
Summary 16 Inflation, 2011-2016
Summary 17 Transport Indicators, 2011-2016
Summary 18 Possession of Consumer Durables, % of Households, 2011, 2016, 2021