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Could decline in imports lead to shortage of products in Azerbaijan?

Could decline in imports lead to shortage of products in Azerbaijan?

Economy
01 July 2020, 15:56 398
Experts say the opposite: the decline in imports indicates an increase in production in the country and an expansion of our export potential

One of the areas most affected by the pandemic is the economy. At a time when global economic dynamics are weakening, the level of economic cooperation between countries has dropped significantly. At this point, along with large and developed countries, the economies of small countries have been hit hard. The decline of Azerbaijan’s imports during the COVID-19 pandemic amounted to about 5 percent. Minister of Economy Mikayil Jabbarov made this statement at a press conference held yesterday. 
He added that the country is also observing the decline in its export operations. "The falling oil prices on the world market have affected the export as well. The cost of our exporting products exceeds the cost of imports,” said Jabbarov. 
The minister noted that it’s too early to talk about how the pandemic harms the economy, as the process of its evaluation is continuing. 
But can a 5 percent reduction lead to a shortage of products? What steps should be taken to prevent this problem from deepening?
Economist, MP Vugar Bayramov says that Azerbaijan has maintained a positive balance in foreign trade. "As a result, exports exceed imports. The country exports more products, which means that the amount of currency entering the country exceeds the amount of currency leaving the country through imports. A 5 percent drop in imports does not pose any risk. Because the percentage of reduction is small and is expressed in single digits. The decline in imports during the pandemic was expected. Because of the pandemic, the dynamics of the global economy has significantly weakened. At the same time, changes in the structure of international import-export operations have had an impact on Azerbaijan's imports. However, there are various other reasons for the decline in imports. But the main factor influencing this figure was the pandemic. The increase in the production of local products, especially agricultural products, had a positive impact on the process of import substitution. That is, we observed the replacement of imports with exports during the pandemic. Also, the reduction and optimization of consumption during this period had an impact on imports. In this sense, the current decline does not pose any risk to the Azerbaijani economy and does not lead to imbalances in the consumer market. As a result, today there is no difficulty in meeting the demand for food and non-food products. One of the priorities for Azerbaijan in the coming periods is import substitution. One of the challenges posed by the pandemic is to reduce imports by expanding domestic production. I think that the new economic model to be applied in the post-pandemic period will also allow import substitution. Expansion of domestic production will lead to meeting demand at the expense of domestic production. This will be one of our priorities in the future,” he said. 
Economist, MP Aydin Huseynov said that at present the goal is to stimulate the export process. "The volume of imports has decreased. However, it is not clear from which category of products there is a decrease in imports. There is no significant reduction in imports of food, medicine, and other essential products. During a pandemic, people need food and medicine the most. Imports of other products are delayed for a while. At present, food products that we cannot supply to the domestic market are mainly imported. There is also a great demand for food products provided by domestic production, which is one of the factors affecting the volume of imports. Another reason is the delay in various large-scale projects due to the pandemic, which is one of the main reasons for the decline in imports. The 5 percent decline in imports is not so great. There is no question of a reduction in volume, which will lead to a serious shortage of products. Most importantly, there are no serious problems with the import of vital products, such as food and medicine. The decline in imports is not dangerous. This shows that production in the country is strengthening and our export potential is expanding,” he said.

Shabnam Mehdizade