President sees 2009 growth at 10%
Azerbaijan`s explosive economic growth will slow
this year to 10 percent as the Caspian oil producer seeks to
stabilize crude prices with oil output cuts, President Ilham Aliyev
told Reuters.
Azerbaijan, perched on giant reserves of oil and gas, has had some of the world`s fastest growth in recent years as its oil and gas production increased during the bull market for oil.
Aliyev said in an interview at the World Economic Forum last week that the days of 30 percent annual gross domestic product growth were over after oil prices tumbled from a peak of $147 per barrel last year.
The president said a fair price for oil was about $80 to $100 per barrel and that Azerbaijan would stick to a pledge to cut oil output by as much as 300,000 barrels per day in a joint attempt with other oil producers to stabilize prices.
"Of course, the times when we had GDP of 25-30 percent are over -- it is not possible to repeat this. And the fact that for the last five years our GDP grew by 26 times, well I think that is a historical record," he told Reuters.
"Our forecast for this year is about 10 percent, which I think in the conditions of the global crisis is more than enough. And probably we will continue this level of development. I think we will manage to do 10 percent," he said.
Last week, the European Bank for Reconstruction and Development (EBRD) cut its 2009 growth forecast for Azerbaijan from 15 percent to 8 percent, still the second best performer in the ex-communist region, after Turkmenistan. The EBRD projected Azerbaijan`s 2008 growth at 10.8 percent.
Azerbaijan, which lies in the volatile Caucasus region at the crossroads between Asia and Europe, is adjusting to lower export revenues after a boom which saw an average GDP growth of 21.1 percent between 2003 and 2007, according to Economist Intelligence Unit data.
As for reducing oil production, Aliyev said cuts would depend upon oil prices but that the target would be a maximum of 300,000 bpd.
"If it remains as it is, probably that will be the target. If it goes up, we will amend the figure. We could then reduce these cuts," he said.
Azerbaijan announced last year at an OPEC meeting in Algeria that it could cut production by 300,000 barrels per day to 540,000 bpd, which will be its lowest output level in two years to help support world prices.
Cuts have already begun, the president said.
"We were planning to produce about 55 or 60 million tons (of oil) a year and now the program is for 50 million tons for the year," he added.
He said Azerbaijan would continue cooperation with OPEC but was cautious when asked if Azerbaijan would join it.
"We were not invited," he said, adding that a fair price for oil would be around $80, $90 or $100 per barrel.
"To my mind, this price is the best for everyone: this will be acceptable for consumers, this will be sufficient for companies to invest and for countries which receive profits from oil sales," he said.
"I can tell you that even with an oil price of $40 or $45 a barrel, which we have today, our economy will successfully function and our economy will be able to tolerate this level of prices. We have had even worse times, as you remember."
Like Russia and Norway, Azerbaijan has set up a fund to keep oil revenues from distorting the economy and to use on long-term investment projects. It currently stands at $11.2 billion.
Azerbaijan, perched on giant reserves of oil and gas, has had some of the world`s fastest growth in recent years as its oil and gas production increased during the bull market for oil.
Aliyev said in an interview at the World Economic Forum last week that the days of 30 percent annual gross domestic product growth were over after oil prices tumbled from a peak of $147 per barrel last year.
The president said a fair price for oil was about $80 to $100 per barrel and that Azerbaijan would stick to a pledge to cut oil output by as much as 300,000 barrels per day in a joint attempt with other oil producers to stabilize prices.
"Of course, the times when we had GDP of 25-30 percent are over -- it is not possible to repeat this. And the fact that for the last five years our GDP grew by 26 times, well I think that is a historical record," he told Reuters.
"Our forecast for this year is about 10 percent, which I think in the conditions of the global crisis is more than enough. And probably we will continue this level of development. I think we will manage to do 10 percent," he said.
Last week, the European Bank for Reconstruction and Development (EBRD) cut its 2009 growth forecast for Azerbaijan from 15 percent to 8 percent, still the second best performer in the ex-communist region, after Turkmenistan. The EBRD projected Azerbaijan`s 2008 growth at 10.8 percent.
Azerbaijan, which lies in the volatile Caucasus region at the crossroads between Asia and Europe, is adjusting to lower export revenues after a boom which saw an average GDP growth of 21.1 percent between 2003 and 2007, according to Economist Intelligence Unit data.
As for reducing oil production, Aliyev said cuts would depend upon oil prices but that the target would be a maximum of 300,000 bpd.
"If it remains as it is, probably that will be the target. If it goes up, we will amend the figure. We could then reduce these cuts," he said.
Azerbaijan announced last year at an OPEC meeting in Algeria that it could cut production by 300,000 barrels per day to 540,000 bpd, which will be its lowest output level in two years to help support world prices.
Cuts have already begun, the president said.
"We were planning to produce about 55 or 60 million tons (of oil) a year and now the program is for 50 million tons for the year," he added.
He said Azerbaijan would continue cooperation with OPEC but was cautious when asked if Azerbaijan would join it.
"We were not invited," he said, adding that a fair price for oil would be around $80, $90 or $100 per barrel.
"To my mind, this price is the best for everyone: this will be acceptable for consumers, this will be sufficient for companies to invest and for countries which receive profits from oil sales," he said.
"I can tell you that even with an oil price of $40 or $45 a barrel, which we have today, our economy will successfully function and our economy will be able to tolerate this level of prices. We have had even worse times, as you remember."
Like Russia and Norway, Azerbaijan has set up a fund to keep oil revenues from distorting the economy and to use on long-term investment projects. It currently stands at $11.2 billion.
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