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Russia’s economic slowdown not to affect Azerbaijan’s growth

7 November 2014 21:56 (UTC+04:00)
Russia’s economic slowdown not to affect Azerbaijan’s growth

By Gulgiz Dadashova

The Western sanctions imposed on Russia amid escalation in the relations between Moscow and Kiev have deteriorated economic forecasts on the vast Eurasian region.

Some experts claim on further worsening of the macroeconomic indicators and their backward effects on the nearby countries by force of the recent slowdown in Russian economy.

The International Monetary Foundation expects that the decline in economic growth in Russia will affect the oil-exporting countries of the Caucasus and Central Asia (Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan) and that growth will fall to 5.6 percent in 2014 compared to 6.8 percent in 2013.

“The CCA's oil-exporting countries are immune to some extent against Russia's slowdown, thanks to diversified export markets and the high oil prices of recent years, which allowed large fiscal cushions to be built up,” the IMF report reads.

The Azerbaijani government rejects any possible impact of the ongoing crisis in its giant northern neighbor to the country’s economy, grounding it with independent economic policy.

The international financial and economic crises may have minimal impact on Azerbaijan, as the country does not enter any economic union. So, it does not depend on any particular country.

“Azerbaijan’s economy is energy-export-oriented. The country’s exports of oil, gas and petroleum products account for 92 percent. So no matter what happens in Russia, this would not such a great affect on Azerbaijan,” Ogtay Axverdiyev, an economic expert, believes.

“Of course, Russia is our main partner in the CIS, but the share of Russia in Azerbaijani exports is only 2.71 percent and import makes up 13.77 percent. Major market for us is Turkey, Europe, Asia, Israel, etc." he said.

He also noted that the gold reserves of Azerbaijan stand at $53 billion and all these reduce the risks posed by external processes.

Strategic currency reserves immune to ruble weakening

Azerbaijan’s strategic currency reserves also immune to the ruble fall.

Deputy Chairman of the Central Bank of Azerbaijan Khagani Abdullayev assured that the fall of the ruble is not expected to influence the rate of the Azerbaijani national currency.

“The manat rate will be regulated in the same mode as before,” he told Trend. “In fact, we tied it to the USD, it's a convenient option. Now the dollar is prevalent in all foreign trade operations, and recently there has been a tendency of strengthening of the dollar against the euro," Abdullayev said.

About 60 percent of the country’s strategic currency reserves are concentrated in dollars, 35 percent - in the euro, the remaining five percent - is the pound sterling, the Swiss franc and the Russian ruble, which share is very small. The share of the Russian ruble in the investment portfolio of the state oil fund SOFAZ is 1.1 percent, which will not cause special problems.

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Follow Gulgiz Dadashova on Twitter: @GulgizD

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