Azernews.Az

The geo-political situation shaping in the backdrop of the brief war fought by Georgia and Russia in August 2008, Turkey and Armenia’s efforts to normalize their strained relations and the European Union and Russia’s increasing interest in Azerbaijan’s energy sector is a precursor of challenges for Baku in maintaining its foreign policy balance, a British research group has said.
In its projections for the next two years, the Economist Intelligence Unit said that, even now, Azerbaijan is under severe pressure from the West over signing new energy projects as well as from rival Russia, which is seeking to counter these projects and secure Baku’s closer energy cooperation, the EIU said. It expects that rivalry between the EU and Russia over Azerbaijani energy resources will further increase in 2010-11.
The think-tank said Azerbaijan will continue making pledges of closer energy cooperation with Moscow to secure Russian backing in settling its long-standing conflict with Armenia. At the same time, Azerbaijan will continue trying to pressure Turkey with the argument of selling its gas to Russia. Baku will attempt to ensure that Ankara does not back down from supporting it on the settlement of the Upper (Nagorno) Garabagh conflict, the EIU said.
As for economic projections, the EIU estimates that Azerbaijan’s Gross Domestic Product (GDP) will make up 9.5% in 2010 due to increasing oil production and insignificant rises in crude prices. In 2011, economic growth will slow down to 9.4% due to the anticipated reduction in oil prices, it said.
The EIU predicted that unemployment will remain unchanged in 2010 but may slightly increase the following year.
Inflation hit a ten-year high of 20.8% in Azerbaijan in 2008, but made up only 1.6% in 2009. Prices for goods dropped and inflation was low in the country last year. The projected hike in prices for energy resources in 2010-2011 will lead to increased demand, subsequently driving up domestic prices.
Inflation is likely to be at the level of 6.5% in the next two years, the researchers said.
The rate of Azerbaijan’s national currency, the manat, will remain stable at 0.8 manats per US dollar in 2010, but it is expected to strengthen against other currencies in 2011, and the dollar will be exchanged for 0.78 manats.
The London-based EIU has been researching political and economic trends in countries around the world for over 60 years. The group, which runs offices in 40 countries, issues projections and analytical data based on research in the areas of economics, industry, politics, risks and management.*