Growth in Baku's trade turnover underscores significance of entrepreneurship in local economy

By Ulviyya Shahin

Between January and July of this year, Baku experienced a notable increase in trade turnover, which rose by 4.4% compared to the same period last year, reaching a total of 18,744.9 million manats. This positive trend reflects a robust economic performance in the capital city, according to a report from the Baku City Statistics Department.

The report reveals that the growth in trade turnover is driven by both food and non-food sectors:

Food Products, Beverages, and Tobacco: Sales in this category increased by 3.9% year-over-year, totaling 10,392.9 million manats. This growth indicates a steady demand for essential consumer goods, despite broader economic fluctuations.

Non-Food Products: This segment saw a more substantial increase of 5.1%, amounting to 8,352.0 million manats. The stronger growth in non-food sales suggests a healthy consumer appetite for diverse goods, including electronics, clothing, and other durable goods.

The distribution of consumer products across various channels highlights shifts in shopping behaviours and business models:

Enterprises with Legal Entity Status: These entities accounted for 37.1% of consumer product sales. This category includes large retail chains and established businesses that have formal corporate structures.

Commercial Facilities Operated by Individual Entrepreneurs: These facilities represented 48% of sales, reflecting the significant role of small to medium-sized businesses in Baku's retail landscape. This indicates a vibrant entrepreneurial sector contributing substantially to the city's economy.

Commodity Markets: Sales through commodity markets comprised 14.9% of the total. These markets often cater to a diverse range of consumers looking for a variety of goods, from fresh produce to household items.

Consumer Confidence: The growth in both food and non-food product sales indicates a positive shift in consumer confidence and purchasing power. The increased expenditure on non-food items, in particular, suggests that residents are willing to spend on discretionary and durable goods, which is a positive indicator of economic stability.

Entrepreneurial Activity: The significant share of sales through individual entrepreneurs underscores the importance of small businesses in the local economy. It also highlights the dynamic nature of Baku’s retail sector, where individual entrepreneurs play a crucial role in meeting consumer needs.

Market Dynamics: The diversity in distribution channels reflects the adaptability and segmentation of Baku’s retail market. The balance between formal enterprises and individual entrepreneurs shows a mixed-market approach that caters to different consumer preferences and shopping habits.

The continued growth in trade turnover and the increase in both food and non-food product sales suggest a robust economic environment in Baku. If this trend persists, it could lead to further investment opportunities and a more diversified retail sector. Additionally, the focus on expanding both formal and informal retail channels will likely continue to drive economic activity and support the city’s growth trajectory.

Overall, Baku’s trade performance in the first seven months of 2024 paints a promising picture of economic vitality, driven by strong consumer demand and a balanced retail ecosystem.