Fewer risks await Azerbaijan's economy amidst tensions in Middle East: economist

Global economic risks are one of the issues that concern the world today. These risks can arise from a variety of sources and have wide-ranging effects.

They are mostly potential threats caused by political, ethnic, religious, environmental, and social factors. Besides, climate change, pandemics, economic inequality, natural disasters, war, terrorist acts, etc. can also be cited as the causes of the global economic recession.

Without going too far, let's take a look at three years ago.

The dreadful virus called COVID-19 has emerged, causing serious health, social, and economic consequences on a global scale.

During the pandemic, connections were weakened and trips were reduced. Only food and distant activities remained available for basic needs. In the rest of the areas, there is a slowdown due to reduced demand. Unfortunately, the biggest loser from the pandemic is still the tourism sector. From several angles, international travel restrictions applied during the pandemic. Measures such as airport closures, quarantine requirements, and travel bans blocked the way for tourists and travellers and also hindered the tourism activities of individual companies.

As mentioned in the recent reports, the ongoing tension in the Middle East is already having an impact on small and medium-sized businesses. Tourism is obviously an important source of income in many countries. A decline in tourism spending leads to an economic recession and revenue losses.

If we look at the ongoing wars today, conflicts and political tensions are damaging investor confidence and creating economic uncertainty. As conflicts drag on, arms production increases, but the economies of arms-buying countries slow down. This leads to increased barriers to trade. Regions with intense conflict are risky for potential investors. Foreign investments in conflict regions are decreasing. Companies are also turning to safer regions instead of investing in unstable regions. For example, the outbreak of the armed conflict in Gaza caused several oil companies to close their oil wells and withdraw from the region. Having opined on this issue, economist Eldaniz Amirov was however, a little positive about this process. He said that the companies ceasing to operate are a drop in the ocean.

"As for the closure of oil wells by some companies due to the conflict between Israel and Hamas, these are the wells aimed at paying a very small part of the demand in the global oil market. This is not reflected in oil prices. It does not have any negative effect on Azerbaijan. Even if it sounds a little strange, I would say that this type of conflict has more positive effects on Azerbaijan.

It is true that it is not a desirable process in general; it would be better not to have it,” he added.

“Azerbaijan also suffered from the pain of the Garabagh conflict for many years. Let's look at the impact of this conflict on the economy of Azerbaijan in the last 30 years," Amirov emphasized.

Saying that the Armenian side still hesitantly recognize the territorial integrity of Azerbaijan, the expert continued his speech as follows:

"It is still unreliable, even though the Armenian side has recognized the territorial integrity of Azerbaijan. There are several stages to be implemented until an agreement is reached between the countries of the region in this regard. The issue of the Zangazur Corridor is the part of the peace agreement between Azerbaijan and Armenia that needs to be discussed the most and the details of which need to be clarified. It is very difficult to say anything concrete about this. Because the final decision has not been made in this regard. However, I believe that the Zangazur Corridor will be opened in all cases, and this will have positive effects on the economy of Azerbaijan, including Armenia itself," the economist concluded.