The European Bank for Reconstruction and Development (EBRD) has improved the forecast for Azerbaijan’s GDP growth in 2021 from 2% to 4%, and in 2022 - from 2.5% to 3.2%, Report informs referring to the EBRD’s November Regional Economic Prospects report.
“The recovery has been stronger than expected on the back of rising oil and gas prices. GDP growth accelerated to 4.8% year-on-year in the period January to September 2021, mainly driven by non-oil sector growth of 6.2%. However, oil production is rising only gradually in line with Azerbaijan’s commitments to the agreement of OPEC+. Therefore, oil and gas GDP growth remained moderate at 1.4% in the same period,” reads the report.
Favorable hydrocarbon prices helped turn the current account into a surplus in the first quarter of 2021, according to the bank’s analysts.
“In spite of currency stability, rising global prices of commodities and logistics services caused inflation to accelerate to 8.5% year-on-year in September 2021. As the inflation rate exceeds the target of 4% +/-2%, the Central Bank of Azerbaijan decided to raise the policy rate by 25 basis points to 6.5% in September. Rising demand and higher prices of oil, supported by an expected continuation of gradual increase of oil production quotas, will support overall economic performance in the second half of 2021. On this basis, the economy is expected to grow by 4.0% in 2021 and 3.2% in 2022,” reads the report.