Azernews.Az

By Aynur Karimova

The Asian Development Bank has kept its forecast for economic growth in Azerbaijan at a level of three percent in 2015, according to ADB's updated "Asian Development Outlook" report, the previous version being published in March 2015.

ADB also kept Azerbaijan’s GDP growth forecast at roughly 2.8 percent in 2016.

"Azerbaijan's economy increased by 5.7 percent in the first six months of 2015, while this figure amounted to 2.1 percent in 2014," ADB reported.

ADB experts believe that the public investment program will remain as key source of economic growth and employment in the country.

The report also noted that Azerbaijan's budget revenues are under pressure from lower oil prices.

"Despite the lower price of oil, its production [in the first half of 2015] increased by 1.3 percent compared to a decline of 3.9 percent recorded in January-June 2014," ADB said.

According to the bank experts, the fiscal policy of the country will remain expansionary in order to support the economy in 2015.

Other financial institutions forecast Azerbaijan's economic growth at various levels. The International Monetary Fund expects a 0.6 percent economic growth in the country for 2015; the World Bank predicts a 2 percent growth in Azerbaijan's economy in 2015; while the European Bank for Reconstruction and Development kept the forecast of economic growth in Azerbaijan in 2015-2016 at 1.5 percent.

Fitch Ratings, in turn, expects the real non-oil growth to reach 5 percent in 2015 and overall real GDP growth to reach 2.3 percent.

Economists believe that the main factors that can affect the dynamics of the GDP are oil prices, global competitiveness of the national currency, and funds allocated from the state budget for investment.

Energy-rich Azerbaijan is not concerned with the declining oil prices, now hovering around $50 per barrel. The government has been taking measures to decrease dependence on petrodollars received from oil and gas exports for quite some time.

The government is also paying special attention to diversification, which has resulted in a 10 to 15 percent rate of growth in Azerbaijan’s non-oil sector over the last two to three years. Relevant programs were adopted at the state level focusing on the development of the agriculture, industry, and IT sectors.

2015 was declared the Year of Agriculture in Azerbaijan, which is expected to give new wind to the development and modernization of agriculture, ensuring a complex and systematic approach to the settlement of problems in the agrarian field, involving the government's administrative and financial resources in this sector, and promoting the country's agrarian potential.

The total volume of the country's GDP in the first half of 2015 amounted to 26.3 billion manats, or 5.7 percent more than in the same period of last year, according to Azerbaijan's State Statistics Committee.

Azerbaijan plans to export products worth $26.8 billion in 2015, some $2.7 billion of which will be goods in the non-oil sector. The Azerbaijani government predicts the share of non-oil sector in Azerbaijan's GDP to be at 65.1 percent for 2015, which is 5.5 percent higher than the forecasts for 2014 and 8.5 percent higher than in 2013.

Lower inflation

The ADB also reported that it believes that Azerbaijan will see one of the lowest inflation rates in Central Asia. According to the bank forecasts, inflation will hold steady at six percent in 2015 and 5.5 percent in 2016.

The report said that the Central Bank of Azerbaijan has reduced liquidity in the national currency, the manat. The bank's experts believe that the devaluation of the national currency that took place in Azerbaijan on February 21, 2015, will continue to put inflationary pressures on the import of non-food products.

The average inflation rate in Central Asia, where ADB usually includes Azerbaijan, is expected to reach 8.1 percent in 2015 and 7.5 percent in 2016.

Earlier, the CBA said that it forecasts inflation in Azerbaijan to be in the single-digit range, while the IMF reported that it predicts Azerbaijan's average annual inflation at 7.9 percent in 2015.

According to Azerbaijan's State Statistics Committee, the inflation rate for the first six months of 2015 stood at 3.5 percent.

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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova

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