THE TRUSTED INVESTMENTS

We can witness a new trend in Azerbaijan, when the population actively invests their personal savings not in the banking system, but in the real sector of the national economy.

According to the State Statistics Committee of Azerbaijan, during January-July 2017, the investments of public funds in fixed assets increased by 39.2% compared to the same period of last year and reached ₼387.1 million. Thus, the share of public funds in fixed assets increased from 3.3 to 4.4% during the current year.

Housing boom

The growth in the share of private saving in fixed asset investments indicates an increase in public confidence in the national economy and the existence of a favorable investment climate in a number of industries. Moreover, this growth occurred amidst the reduction in investments in the national economy: according to the results of seven months of 2017, ₼8.7 billion was invested in fixed assets, which is 0.3% less compared to the same period of 2016.

On the other hand, the activation of the population can be considered a compulsory step, which has traditionally preferred to keep the savings in banks. The crisis in the banking sector, which started last year, led to the closure of almost every fourth bank, and as a result, investors began to withdraw their savings from them. According to the Central Bank of Azerbaijan, as of July 1, 2017, the population's deposits in the banking system amounted to ₼6.9 billion, which is less by ₼908 million, or 11.7%, than on July 1 last year. But it is also impractical to hoard the savings watching how they lose their buying value and suffer from inflation, which was 14% during the previous seven months. Therefore, one of the most optimal solutions was the placement of free money in business projects in various sectors of the non-oil economy.

First and foremost, improvement of living conditions is the most beneficial project. So, investments in the construction industry in the first seven months of 2017 amounted to ₼1.3 billion, which is 1.9% less than in 2016. But 458.6 ₼million were directed to housing construction, which means an annual growth of 42%. Thus, the share of housing construction in investments in fixed assets increased from 4.1% to 5.2% during the year.

Growth in the volume of investments in housing business led to an increase in the volume of housing to be commissioned, which, according to the results of seven months of 2017, amounted to 973.7 thousand sq. m, which is 9.7% more than last year's indicator. Such a high rate of housing construction this year indicates that private business and the population have more trust in the prospects of the national economy. Accordingly, the capital exports by the business and population in 2015-16, as well as the sharp decrease in the volume of the housing space could turn into a new boom in the construction sector. After all, every manat invested in housing construction allows the sector to attract up to four manats to related industries.

Perhaps, private housing construction is also flourishing thanks to the flow of foreign tourists to Azerbaijan, which has significantly increased. Some residents are eager to earn extra money by getting additional income from renting their houses and villas in Baku and the regions during vacation both to local citizens and foreign guests.

Renewable infrastructure in the regions

The opening of new highways, the commissioning of water supply and sewerage systems, telecommunication nodes and electrical substations, schools and day nurseries, health facilities and sports facilities after reconstruction have become a good tradition in the framework of President Ilham Aliyev's visits to the regions. Baku no longer attracts the population of the regions like a magnet, and some residents of the capital even decided to move to the provinces with an improvement in their living conditions.

"The migration from all regions observed in previous years in Baku has now declined, and the reverse process has started at the same time. Now people are returning from cities to villages, as excellent opportunities have been created for the development of agriculture, "the head of state said at a republican meeting devoted to the development of tea, rice and citrus production.

By the way, according to the State Statistics Committee, during the first seven months of this year, the national economy had 12% growth of investments in agriculture (up to ₼135.2 million).

As a rule, those who decided to return to the regions, invest their private savings in orchards for growing hazelnuts, pomegranates, vineyards, citrus fruits, etc. That is, trying not to overload themselves with agricultural work, rather combining work and rest.

In this context, significant private savings can be used for the creation of modern storage facilities and autoparks. With the support of government authorities, modern agro-parks are being opened in various regions of the country (Yalama, Shamkir, and other regions), which are capable of storing and processing agricultural products, as well as for exporting products to the nearest countries.

The availability of modern refrigeration units in warehouses allows prevention of a noticeable increase in prices for fruit and vegetable products in the winter period, which has a social significance for the country.

During the seven months of 2017, the volume of investments in transport and storage warehouses reached ₼971.4 million, which is 36.1% more compared to the same period of 2016. Thus, the share of investments in transport and storage facilities in fixed assets increased from 8.3% to 11.1% during the year.

Increased investment in the non-oil sector will create new production and jobs in the regions and reduce the difference in the quality of public services in the regions and Baku.

Ultimately, the development of businesses in regions and the increase in export potential due to agrarian production will significantly reduce the dependence of the national economy on fluctuations in global oil prices and strengthen the national currency, giving confidence in the country's progressive social and economic development.