Azernews.Az

By Mirsaid Ibrahimzade

Sberbank Investment Research analysts point out the resilience of the Azerbaijani economy to external factors and forecast an acceleration of the country's GDP rate in 2019 to 3.2 percent.

This was stated in the review of the CIS Market Daily, prepared by analysts of Sberbank Investment Research, Report informs citing Interfax.

"We are generally optimistic about the short-term economic outlook for Azerbaijan and Kazakhstan following our visit to these countries and meetings with company representatives and government officials. The rise in oil prices, along with increased oil and gas production, supports the economies of these countries and allows them to increase financial "cushion" and improve external positions. These processes will continue if in the current year oil prices, as we believe, will remain around $70 per barrel," the document says.

The acceleration of economic growth in Azerbaijan will be provided by the oil and gas sector. "The increase in oil prices in 2018, along with the improvement in the dynamics of oil and gas production, supported the Azerbaijani economy by stimulating GDP growth. In Azerbaijan, we expect GDP growth to accelerate from 1.4 percent to 3.2 percent against the backdrop of a recovery in investment activity," the review said.

According to analysts of Sberbank Investment Research, the Azerbaijani authorities used the increase in oil prices to increase the financial "cushion" and reduce foreign debt in 2018.

"The budget was reduced with a surplus, the assets of the State Oil Fund grew, and we expect that this year Foreign debt is likely to continue to decline gradually, as government and state-owned companies are trying to replace external debt with local borrowing," the report notes.

In monetary policy and in banking regulation, the situation has improved.

"The monetary policy has become more transparent, although the ideal is still far away. This is especially true in the case of Azerbaijan, where the exchange rate remains tightly controlled. In addition, the banking sector remains a weak spot. In Azerbaijan, a large open currency position remains in the sector, i.e. it is still extremely vulnerable to currency shocks," the analysts believe.

The government of Azerbaijan predicts GDP growth at 3.6 percent for 2019.

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