EBRD: Azerbaijan’s economy to grow by 3,3% in 2020

  • 18:56 08 May 2019

EBRD: Azerbaijan’s economy to grow by 3,3% in 2020

European Bank for Reconstruction and Development (EBRD) has updated the forecast for economical grow of Azerbaijan, ONA reports referring to EBRD report.

Azerbaijan’s economy started reviving in 2018 after decline and near stagnation in the previous two years. GDP expanded by 1.4 per cent in 2018, supported by an increase in the oil price and rises in gas production and exports. The non-oil sector recorded 1.9 per cent growth.

Output in transport, real estate, non-oil industry, trade, agriculture, and information and communication services all increased. The loan portfolio contraction levelled off in February 2018 and grew by 12.2 per cent in nominal terms in the following year. Loan and deposit dollarisation has been declining, but remains high at 37.1 per cent and 65.0 per cent respectively, as of February 2019. External and fiscal balances recovered on the back of rising oil prices.

The current account surplus widened from 4.1 per cent of GDP in 2017 to 12.9 per cent in 2018, as receipts from the oil and gas sectors increased by 37.3 per cent. The consolidated budget moved from a deficit of 1.5 per cent of GDP in 2017 to a 5.9 per cent surplus in 2018. On the back of a stable exchange rate, supported by growing oil prices and tight management of manat against the US dollar, inflation declined from an average of 12.9 per cent in 2017 to 2.3 per cent in 2018, allowing for further monetary policy relaxation.

According to preliminary estimates, GDP grew by 3 per cent year-on-year in the first two months of 2019. The outlook in the near term is shaped by the expected increase in the output of the combined oil and gas sectors. We forecast the economy to grow by 3.5 per cent in 2019 and 3.3 per cent in 2020.