Azernews.Az

By Gulgiz Dadashova

Azerbaijan's economic growth is expected to continue in the short term as predicted by the government and the Central Bank of Azerbaijan (CBA), as well as international institutions.

According to the latest economic surveys of the World Bank and the Asian Development Bank, the economic growth, which is projected at 4.1 and 3.1 percent, respectively, will be retained in Azerbaijan in 2013.

The results of a CBA monitoring show that expectations for economic activity are promising. Thus, the indices of the demand for services and the expectations of sales in trade tend to increase. Positive expectations are observed in the food industry, production of construction materials and weaving, as well as the sale of furniture and household electrical equipment.

The International Monetary Fund (IMF) in its latest report said the average annual inflation in Azerbaijan is projected at 3.4 percent in 2013, which is 3.4 percentage points below that in other CIS countries.

The European Bank for Reconstruction and Development (EBRD) also expects acceleration of the economic growth trends in Azerbaijan in 2013.

EBRD predicts Azerbaijan's GDP growth at 3.5 percent in 2013 and 4 percent in 2014, compared to 2.2 percent in 2012.

"According to the results of the monitoring of the real sector, no significant growth is seen in the expectations for prices in the economy. During the first quarter of this year, there was a neutral expectation of prices in the construction and industrial sectors, as well as in the service sector. A downward trend is seen on trade in expectations for prices over the next three months, " the CBA report on the monetary policy says.

Meanwhile, the state forecast on GDP growth rate in 2013 is at 5.3 percent, and the total volume of Azerbaijan's GDP is expected to reach $71 billion, with 55 percent of the growth to be provided by the non-oil economy.

The country posted a 9.7 percent growth in the non-oil sector and its share in GDP reached 52.7 percent in 2012.

The State Statistics Committee reported that Azerbaijan's GDP grew 3.1 percent in the first quarter of 2013 compared to the same period of 2012 and amounted to 12.947 billion manats.

Azerbaijan's strategic currency reserves have reached $47.1 billion, which is enough to cover imports of goods and services over three years.

Rising strategic reserves

The CBA said that the strategic currency reserves of the country rose by 2.3 percent, or $1.1 billion, in the first quarter of 2013 compared to early this year. The ratio of the strategic currency reserves to the country's GDP is close to 70 percent.

High growth rates of the strategic currency reserves are a factor that reduces the sensitivity of the economy to external crisis impact and forms a strong macroeconomic buffer.

The CBA reports that the country's strategic currency reserves continued to grow during the reporting period and exceeded the international sufficiency level.

According to the CBA report on the Q1 results, the bank's foreign currency reserves grew during the reporting period by 5.5 percent to reach $12.3 billion, which is enough to finance imports of goods and services over a year.

Meanwhile, the State Customs Committee reported that the country's trade turnover in January-March amounted to $8.6 billion, of which about $6.3 billion fell to exports and $2.2 billion to imports. The trade surplus in the three-month period amounted to $4.1 billion.

The CBA said that a further increase is expected in the level of self-sufficiency on most agricultural commodities and foods by late 2013.

"The level of self-sufficiency on some of them (melons, vegetables, fruits and berries) will exceed 100 percent, which means turning the country into an exporter of the product," the report reads.

The dynamics of remittances and capital flows from abroad, along with exports, had an enhancing effect on foreign exchange earnings.

According to the State Statistics Committee, the volume of foreign investment in the country's economy in the first quarter of 2013 totaled $329 million, which is a decrease compared to the same period of 2012 by 18 percent.

Yield on CBA notes

As part of the sterilization operations in January-March 2013, the CBA has issued notes amounting to 252.6 million manats. Of them notes in the amount of 164 million manats were put up for auctions.

At the last auction, the average yield on the notes was 1.22 percent, whereas in the beginning of the year the figure was 1.76 percent.

As of April 1, the volume of notes in circulation amounted to 44 million manats. The volume of repo transactions with the notes amounted to 11 million manats at the end of the first quarter.

Business confidence grows

The CBA also cited an increase in the index of business confidence (IBC) in the country in Q1 2013.

According to the conclusions of the real sector monitoring, commercial and industrial reserves decreased, while the number of new applications increased as of the end of Q1.

IBC also improved during the first quarter in industrial production and trade. Businesses operating in these sectors had promising prospects.

In general, IBC in trade rose to 12.5 percent compared to 5.4 percent in Q1 2012. In the industrial sector IBC reached 8.6 percent, against 3.6 percent posted last year.