Azerbaijan’s oil bounty has proved a blessing and a curse. ‘The contract of the century’ signed in Baku in 1994 – between the country's government and 11 foreign oil companies, led by BP, to develop a deep-water field in the Caspian Sea – unleashed rapid development. As Azerbaijan turned into a major energy supplier, its economy became one of the fastest growing in the world. Between 1995 and 2015, inflation-adjusted gross domestic product (GDP) growth increased by six times. In one of those years, Azerbaijan’s economy expanded a blistering 34.5%.
It was not to last. A steep plunge in global oil prices, from a peak of $115 per barrel in June 2014 to below $35 at the end of February 2016, led to a deep recession and, after nearly two decades of exchange rate stability, Azerbaijan was forced to devalue its currency, the manat, by 50%.
