EBRD forecasts Azerbaijan’s GDP to expand by 2.8% in 2019
Economy13 November 2019, 13:15 153
Economists are confident that this trend will continue in the coming years
The European Bank for Reconstruction and Development (EBRD) expects Azerbaijan’s gross domestic product (GDP) to grow by 2.8 percent in 2019 and by 2.4 percent in 2020. According to the report, the economic recovery that began in 2018 continues in 2019. GDP growth accelerated from 1.4 percent in 2018 to 2.4 percent year on year in the first eight months of 2019. The non-oil and gas areas of the economy grew by 3.0 percent year on year in the same period, up from 1.9 percent in 2018. Indicators of output growth in non-oil and gas industries, agriculture and services are all positive so far in 2019. The previous report stated that on the back of a stable exchange rate, supported by growing oil prices, inflation declined from an average of 12.9 percent in 2017 to 2.3 percent in 2018.
Do these indicators reflect reality, and what do they promise for the coming years?
Expert Parviz Heydarov said that recent statements by international financial institutions and rating agencies about the economy of Azerbaijan are consistently positive. "Analyzing the views and forecasts on the country's economy, we can see that the results have changed for the better. There are several reasons for this. In recent years, there is significant progress in the development of the non-oil sector, the main driving force of the country's economy, its share in the GDP has begun to dominate, and the production of competitive, export-oriented products has expanded. Measures are taken to increase the export of non-oil products in the country in terms of both quantity and range. I believe that our exports will continue to expand. As a result, the positive balance in our foreign trade turnover will increase. All this is of particular importance in terms of attracting new investment flows to the country. Therefore, increasing our GDP growth rates is significant. In real terms, this is a particularly demanding factor for the Azerbaijani economy,” he said.
The economist noted that substantial economic reforms have already started in Azerbaijan. "Substantial structural reforms are underway in the country, which is significant in sustaining economic growth. According to January-September 2019 statistics, GDP growth was 2.5 percent. By the end of the year, this indicator may be slightly higher. Compared to last year, we achieved positive results in GDP growth. EBRD's forecast reflects reality. This trend is expected to continue over the next few years because both external and internal economic factors contribute to the further development of the country's economy. Under these conditions, there is no doubt that GDP will grow by 2.8 percent,” he added.
According to economist Rashad Hasanov, the European Bank for Reconstruction and Development's forecast for the country's economy is a preliminary assessment. "Of course, when calculating these indicators, the growth rates in various sectors of the economy, especially in the non-oil sector, are taken into account. Another factor influencing these indicators is the recent price of oil on the world markets and the strategic roadmap for economic diversification. The EBRD pays attention to such issues as the increase in aggregate demand stemming from an increase in public budget spending. I believe that the growth rate of the economy in the coming years will be more than 2%. It is not right now to say concrete indicators for the next years. In particular, one of the key components of GDP formation is the direct dependence of foreign trade balance on oil prices, which keeps the possibility of further price changes affecting GDP. That is, the economy of the country still depends on external factors. Currently, GDP growth is about 2%. In the following years, this indicator will change depending on the level of development of economic processes,” he said.