ING Bank forecasts Azerbaijan’s GDP to grow 1.6pct
By Sara Israfilbayova
The Dutch ING Bank has forecasted Azerbaijan’s economy to grow 1.6 percent in 2018.
This year, Azerbaijan’s GDP will decrease by 1 percent, according to the bank’s Russia & CIS macro outlook report.
“The expected drop in oil and natural gas output by 2.5-5 percent in 2017 will weigh on growth given the oil sector’s 42 percent share in GDP,” reads the report.
The Bank’s experts noted a modest growth in Azerbaijan’s agriculture and non-oil related industrial sectors.
The bank’s analysts also expect the exchange rate of the Azerbaijani manat to gradually strengthen against the US dollar and be 1.59 AZN/USD in 2018.
As for the inflation rate, according to the bank, the inflation rate will decrease to 7.2 percent in Azerbaijan in 2018.
The bank’s analysts forecast the inflation to be 13 percent in 2017.
International financial organizations such as the International Monetary Fund (IMF) and the World Bank (WB) have earlier made more positive forecasts with regard to the inflation rate in Azerbaijan. The IMF forecasts the average annual inflation rate to be 10 percent in Azerbaijan in 2017, 8 percent in 2018 and 6 percent in 2022.
According to the latest WB report, Trade in Transition, the inflation rate will be 7.8 percent in the country in 2017, 4.2 percent in 2018 and 3.8 percent in 2019.
Prices for consumer goods and tariffs for services rose by 13.5 percent in Azerbaijan in January-April 2017 as compared to the same period of 2016, according to the country’s State Statistics Committee.
Besides, ING Bank experts believe that the CBA can reduce the discount rate to 12 percent in 2018.
Currently, the CBA discount rate is 15 percent. In their report experts of the bank note that during the current year the discount rate in Azerbaijan will not change.
Recently, CBA Chairman Elman Rustamov said that in mid-June it is planned to discuss the possibility of revising the discount rate. As noted by Rustamov, this is due to the fact that inflation in the country continues to decline. In this situation, the issue of mitigating the discount rate is being updated, the CBA head added.
Last time the CBA revised the discount rate in September 2016, increasing it from 9.5 to 15 percent. After that, the CBA twice during 2017 decided to keep the rate at this level.
Currently, 32 banks (including 15 banks with foreign share) operate in Azerbaijan and two of them are state-owned ones.
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