Azernews.Az

BAKU – The economics in the Caucasus and Central Asia regions, including Azerbaijan, posted growth in 2010 after the crisis, the International Monetary Fund has said in its latest report.

"The post-crisis recovery took hold in 2010, with growth estimated at 6.5 percent, substantially higher than in 2009 (3.5 percent). Last year’s outturn was higher than previously projected, except in Armenia and Turkmenistan, and consistent with performance in other emerging and low-income countries," the IMF said.

The recovery was mainly driven by higher oil and gas exports - helped by favorable prices - and by public investment and fiscal support to sectors affected by the crisis, the report said.

In the four oil and gas exporters - Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan - growth averaged 7 percent, compared with 4 percent in the oil and gas importing countries Armenia, Georgia, Kyrgyzstan and Tajikistan, although those countries benefited from higher mineral and metals prices.

In Azerbaijan and Kazakhstan, currency reserves are on the rise. However, the two countries face inflation risks.

The IMF said that with global fuel and food prices expected to increase by 18 and 15 percent, respectively, in 2011, inflation is projected to pick up to almost 10 percent in 2011, nearly 3 percentage points higher than previously envisaged. Annual inflation is approaching double digits in Azerbaijan and Kazakhstan, and has already passed this threshold in the other regional countries, except Turkmenistan. Higher commodity prices will result in stronger current account balances in the oil and gas exporting countries, and weaker among the oil and gas importers.

"Although various subsidy and price regulation mechanisms limit the direct pass-through of rising global energy prices - mainly in the oil and gas exporting countries - indirect channels, particularly distribution costs and inflation expectations, can quickly transmit external energy price shocks, reinforcing the effects of the food price shock."

Azerbaijani independent analysts have also cited high inflation risks. The Economic Research Center claimed average inflation in Azerbaijan made up 15 percent in the past year, based on research carried out in ten regions of the country in March.