Azernews.Az

The European Bank for Reconstruction and Development has revised up its forecast of GDP growth in Azerbaijan in 2012, according to the EBRD website.

In the October report, released on Tuesday, the EBRD said the country’s GDP growth is projected at 0.5 percent in 2011 and 4 percent in 2012 (against the previous projection of 3 percent).

Inflation is expected to be 8.5 percent as of the end of 2011, compared to the 9.1 percent predicted in July, the report says.

The EBRD also said economic growth in Azerbaijan has slowed down as oil and gas production declined, arguably due to extended maintenance works. The diversification of the economy remains important as risks associated with high oil dependence became apparent during the crisis, when oil prices declined. FDI inflows into the non-oil sector remain low. Immediate macroeconomic risks are mitigated by a very strong fiscal position, the report said.

On emerging Europe’s economic growth next year, the EBRD predicted a slow-down and said the continuing eurozone sovereign debt crisis poses challenges to recovery from the 2008-09 global financial crisis.

The EBRD’s report underlines that "economic fundamentals" in the EBRD region are "stronger in several respects" than before the onset of the crisis.

But it notes that increased stress in the eurozone could have an even more severe impact on emerging Europe this time around. The latest forecasts assume a protracted but ultimately contained eurozone debt crisis.

The report revises down predictions for 2011 economic expansion in the EBRD region to 4.5 percent compared with 4.8 percent seen in July. Growth in 2012 is now seen at 3.2 percent, compared with the 4.4 percent expected three months ago.