ADB makes optimistic forecast on Azerbaijan’s GDP

By Fatma Babayeva

Azerbaijan will see 1 percent rise in its gross domestic product (GDP) in 2017, according to the Asian Development Bank’s (ADB) Outlook 2016, which was released on March 30.

The ADB forecasts that the low oil prices in 2016 may lead to a decrease by one percent in GDP, but the expected recovery in oil prices will cause it to grow by one percent in 2017.

The bank had previously predicted 2.8 percent growth of GDP in Azerbaijan for 2016.

Low oil prices in 2015 reduced the country's revenues from export, and a sharp depreciation of its currency led to the reduction in public investments and caused a slowdown in GDP growth by 1.1 percent.

The oil sector in Azerbaijan grew by 1.2 percent in 2015 after declining to 3.7 percent in 2014, while the non-oil sector grew only by 1.1 percent compared to 7 percent growth in 2014 by force of fall in public investments, the bank reported.

The inflation rate in Azerbaijan was projected to be 12 percent for 2016 but the ADB’s experts forecast 5.7 percent decline in inflation rate in Azerbaijan for 2017.

Oil production sector will shrink due to the slowdown this year. However, growth is expected in this sector in 2017 in case of rising oil prices which may lead to increase in the country's revenues. At the same time, the sustainable support by the government will lead to the growth of agricultural sector, ADB’s experts believe.

Azerbaijan holds a stake of 0.5 percent in the bank's capital.

The leading shareholders of the ADB are Japan and the United States (31.2 percent of the total stock capital), India and China (12.8 percent), Australia, South Korea and Canada (16 percent), etc.

ADB’s predictions coincided other forecasts on Azerbaijan’s GDP for the current and coming years just with slight difference. Moody’s Investors Service forecasted real GDP growth rate to slow down to 1.7 percent in 2016 from 2.8 percent in 2015 in Azerbaijan. Moody’s expects it to accelerate to around 3 percent during the period of 2017-2019.

International ratings agency Standard & Poor’s projected the GDP growth by 2 percent in Azerbaijan in 2017, 4 percent in 2018, and 4.5 percent in 2019.

Meanwhile, the World Bank predicts 2.6 percent growth of the GDP in Azerbaijan in 2016 and 2.7 percent in 2017. The European Bank for Reconstruction and Development was also optimistic about the real growth rate of the GDP in the country, predicting it to reach 2.5 percent.

The State Statistics Committee of Azerbaijan, however, reported 3.2 percent decline in GDP for January-February 2016.

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