European rating agency forecast stable growth of Azerbaijani economy
By Sara Israfilbayova
The European Rating Agency (ERA) has issued a credit rating to Azerbaijan at the level of “BB +”.
The reports reads that the economy shows signs of stabilization based on inflation calming, improvements in real growth, and positive expectations on oil price dynamics.
The long-term forward-looking indicators demonstrate certain improvement, though the overall assessment remains moderate on efficiency indices.
The agency’s report says that real GDP growth in Azerbaijan in 2018 can be 1.5 percent, in 2019 - 2.1 percent, nominal GDP is expected at $44.1 billion and $47.441 billion, respectively.
The credit rating reflects the observed stabilization process in the Azerbaijani economy.
According to analysts of the agency, the basic processes in the economy demonstrate positive trends, such as stabilization of inflation, positive indicators of the external sector.
The agency expects strengthening of the economy’s real growth, supported by a more positive external environment of the country's main export goods.
Among the basic factors and prerequisites, there is a low probability of political shocks, including the situation around the Nagorno-Karabakh conflict, a stable level of production in Azerbaijan's oil and gas sector and the revival of the country's banking sector.
According to the agency’s forecast, unemployment rate in 2018 and 2019 can be 4.9 percent.
The report further says that inflation can be reduced to 5.9 in 2018 and to 5.7 in 2019, meanwhile in 2017 it was 12.9 percent.
Analyzing import-export operations carried out in the country, the experts of the agency forecast that exports in 2018 can reach $15.3 billion, in 2019 – $16 billion, imports are expected to amount to $8.6 billion and $9.3 billion, respectively.
It is noted that today both the oil and non-oil sectors provide the growth of the economy of Azerbaijan. At the same time, as the agency expects, the prices for Brent crude oil will vary in the range of $60-70 per barrel, which will help the economy grow further.
On the other hand, the agency noted the significant role of the non-oil sector in economic growth. So, in January-August 2018, the non-oil economy grew by 10 percent as compared with eight months of the last year. The declining inflation (2.7 percent in January-August 2018) and the steady manat rate testify to weakening of monetary pressure, which is a vital condition for reviving the investment inflows.
The agency’s analysts indicate that the country’s economy is in a more stable and predictable phase, thanks to moderate inflation and stable exchange rate. As a result, the currency risks are mitigated and the real incomes and wages of the population enter a positive growth zone. As long as this trend continues throughout 2018-2019, the additional support for GDP growth can be expected.
EuroRating is a fully independent international credit rating agency, operating since 2007, specialized in credit risk assessment of corporations and financial institutions.
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