Azernews.Az

By Gulgiz Dadashova

The Central Bank of Azerbaijan (CBA) reported that the Business Confidence Index (BCI) in the country has improved in the first half of 2013.

The BCI is an indicator designed to measure the degree of optimism on the state of the economy that business owners are expressing through their activities of investing and spending. The more confident business owners and managers feel about the economy, their companies, their jobs and incomes, the more likely they are to make investments and purchases.

The results of a CBA monitoring on the real sector of the economy note that reason for the BCI improvement was the growth of industrial production and sales in the trade. Also, the monitoring results show optimistic expectations for economic activity

The BCI in the industry in the first half of 2013 was 13.2 percent, which increased by 2.9 percent compared to the same period in 2012.

In January to June, the BCI in the trade also showed impressive growth as it increased by 4.3 percent up to 10.3 percent compared to the same period of 2012.

The CBA report further reads that there were positive expectations in the food industry, building materials, weaving and trading of furniture and household appliances in Azerbaijan. This also affected the reduction of stocks of unsold products.

Overall, the results of the monitoring show a steady increase in the number of enterprises showing the growth of production and sales.

The CBA monitoring also shows optimistic expectations for economic growth in the country in 2013 compared to 2012.

Thus, growth is projected in industrial production and demand for services.

In general, the monitoring results show an increase in the number of enterprises with growing production and trafficking.

According to forecasts of the government, the CBA and international institutions, economic growth is expected to continue in the country in the short term.

In the their latest economic reports the International Monetary Fund (IMF) and the Asian Development Bank predicted growth of the Azerbaijani economy in 2013 at 4.1 and 3.1 percent respectively

The CBA report reads that the difference between potential and actual GDP in the first half of 2013 was 0.9 percent, and is expected to increase to 1.7 percent by late 2013.

An increase in domestic demand will play an essential role in maintaining the difference between potential and actual GDP in positive zone in 2013.

The State Statistics Committee reported that the country's GDP grew by five percent in the first half of 2013.

Meanwhile, the monitoring showed that there was a decrease in price expectations in all sectors (industry, construction, trade and services sector) in the first half of 2013.

The highest price decrease is expected in the retail sector in 2013.

The latest forecast by the IMF said inflation in Azerbaijan is expected to reach 3.4 percent in 2013. This figure is lower by 3.4 percent than those forecast for the CIS countries, by 1 percent than the countries of Central and Eastern Europe, and by 2.5 percent in general compared to the projected inflation rate in developing economies.

According to the CBA model estimates, by late 2013 inflation will remain within the framework stipulated in the main directions of the monetary policy and financial stability.

"The evaluation was carried out on the model ARIMA (Autoregressive Integrated Moving Average), allowing to define various scenarios of inflation. Evaluation results show that inflation by the end of 2013 will remain at 6.5 percent," the report said

In 2012, the country's inflation ratio stood at 1.1 percent.