The European Bank for Reconstruction and Development (EBRD) expects that Azerbaijan's GDP will recover and increase by three percent in 2021, local media reported, citing the report of the European Bank for Reconstruction and Development (EBRD).
According to the EBRD report, Azerbaijan’s output expanded modestly by 2.2 percent in 2019, driven by the non-oil and gas sector which increased at the rate of 3.6 percent.
“Agriculture and services also showed positive growth. Low inflation of below 3 percent has allowed the central bank to continue cutting the refinancing rate, to 7.25 percent at end-January 2020. With the hydrocarbon sector generating more than a third of GDP, roughly two thirds of government revenue and 90 percent of export receipts, the recent oil price decline will hit Azerbaijan’s economy in 2020,” said the report.
“The State Oil fund of Azerbaijan (SOFAZ) sold nearly $2 billion of foreign exchange to local banks in March amid soaring demand. The pressure on the currency weakened in April. In an effort to boost confidence in the banking sector, the authorities extended a blanket guarantee for all deposits until early December 2020. The exchange rate has remained stable to date,” noted the report.
“Large SOFAZ’s assets, approximately 90 percent of GDP, will continue cushioning the economy against the external shock. However, a prolonged period of low oil prices and weak global demand could cause serious imbalances in the economy. On the back of these developments, we expect the economy to contract by 3 percent in 2020, recovering by 3 percent in 2021,” the report said.
The European Bank for Reconstruction and Development is a leading investor in Azerbaijan and has invested about 3.3 billion euros in various sectors such as energy, infrastructure, banking, industry and commerce.