Azerbaijan and Latvia synchronize their efforts Trade and investment diversification

In recent years, Azerbaijan and Latvia have focused on diversifying their trade and economic relations while fostering investment initiatives from both countries’ business communities. Key areas of collaboration include joint projects in agriculture, food production, logistics, green energy, digitalization, tourism, and education. These emerging business trends were explored during the "Azerbaijan-Latvia Information and Networking Meeting" and a joint business forum held in Baku this week.

In January 2024, Baku and Riga marked the 30th anniversary of establishing diplomatic relations. Over this period, the two countries have consistently built a constructive political dialogue, developing cooperation in both economic and humanitarian spheres, while also participating in EU-initiated joint twinning projects.

Latvia has traditionally viewed Azerbaijan as the economic leader of the South Caucasus region and a key energy partner of the European Union. In turn, Azerbaijan has recognized Latvia as a major transport and logistics hub in Northern Eastern Europe and a crucial platform for exporting Azerbaijan's non-oil products to Latvian and neighbouring markets. This trend has significantly strengthened since mid-2018, when, at the initiative of Azerbaijan's Export and Investment Promotion Agency (AZPROMO), the Azerbaijani Trade House was established in Riga.

Over time, it has evolved into a key transit hub for further promoting food and other non-oil products to neighbouring Baltic countries and onward to the broader European market. In recent years, Azerbaijan has systematically exported products to Latvia, including Azerbaijani wines and brandies, canned fruits and vegetables, juices, jams, narsharab (pomegranate sauce), olive and lavender oils, tea, as well as fresh tomatoes, pomegranates, persimmons, melons, and hazelnuts.

All of the aforementioned factors have formed the foundation for the continued expansion of economic cooperation between the two countries, especially since there remains a vast and still largely untapped potential.

"The potential opportunities for expanding cooperation between Latvia and Azerbaijan significantly exceed the current level of business relations," said Latvia's Ambassador to Azerbaijan, Edgars Skuja, during the business forum. "We already have traditional areas, such as exports, but I believe it is important to move beyond this, and I am convinced that the potential for bilateral cooperation in business and joint project implementation is very high."

Overall, the past two years have been particularly indicative of the growth in trade relations between the two countries. In 2022, marked by an energy crisis in the EU, Azerbaijan-Latvia trade turnover increased by 70%, reaching $46 million, with a significant positive balance in favour of Azerbaijan. Trade dynamics further strengthened in 2023, rising to $65 million, with Azerbaijani exports accounting for nearly two-thirds of this total.

According to the Ministry of Economy, as reported by Caliber.Az, from January to October of this year, trade turnover between the two countries amounted to $23 million, with just over a fifth attributed to Azerbaijani exports. While 2024 has not yet concluded, it is clear that trade dynamics have noticeably slowed. In this context, Baku and Riga are focused on enhancing joint efforts to diversify their trade and economic relations.

"Azerbaijan is demonstrating impressive progress: we are observing the development of all regions of Azerbaijan with great optimism, including the rapidly developing Karabakh. New technologies are being actively implemented in your country, the green economy is expanding, wind and solar parks are being built, energy storage systems are being developed, and initiatives in digitalization are underway," said Skuja. "In this regard, we should pay special attention to partnership in new technologies and consider the prospects for joint projects across various sectors," he added.

According to the Ambassador, to discuss potential directions for trade and investment cooperation, the 9th meeting of the Azerbaijan-Latvia Intergovernmental Commission on Economic, Scientific-Technical, and Cultural Cooperation will be held in Baku in the spring of next year.

Similar efforts are being carried out by the Latvian business delegation in Baku, where several meetings with government agencies and organizations have been held in recent days. Productive contacts have been established with Azerbaijan’s business community in a B2B format, and events have been organized with the participation of about 20 companies from both countries.

"We are seeing a 30% increase in interest from Latvian companies in implementing projects in Azerbaijan, and this figure applies not only to those who are still in the exploration phase but also to companies that are already doing business in your country," said Līga Sičeva, Director of the EU Projects Department at the Latvian Chamber of Commerce and Industry, during the forum. "I believe this is an excellent result and an important signal for companies in both countries, highlighting the enormous potential for expanding our cooperation, especially in high-value sectors such as IT, education, and green technologies, as well as in traditional industries like agriculture, food production, and tourism."

The interest in diversifying trade and expanding the investment component is mutual. In 2025, AZPROMO will organize an export mission for Azerbaijani entrepreneurs to Latvia, which will include participation in the 29th Riga Food Exhibition, held in the capital of this Baltic country.

"About 40 Latvian companies are operating in Azerbaijan, and we are confident that this number can be increased. This applies to both bilateral relations and the expansion of trade turnover and business activity," said Yusif Abdullayev, Executive Director of AZPROMO, on the sidelines of the event. According to the AZPROMO director, the Azerbaijani delegation intends to participate in Riga Food, viewing this forum as a platform for further collaboration. "Additionally, several events are planned for 2025 with the Latvian Chamber of Commerce and Industry and other platforms, and we are confident that these steps will contribute to the expansion of bilateral business ties."

Another important avenue for joint projects is the participation of Latvian entrepreneurs in contracting and investment initiatives in the Karabakh region of Azerbaijan. "The liberated areas of Azerbaijan offer vast opportunities for business initiatives, and we invite Latvian businesses to take advantage of this opportunity for mutually beneficial cooperation," said Orkhan Mammadov, Chairman of the Small and Medium Business Development Agency (KOBIA). According to him, KOBIA is ready to provide comprehensive support to Latvian entrepreneurs and coordinate promising projects in the Karabakh region.