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Report Research Group: This year inflation to fall to the lowest level in Azerbaijan

In the coming months, deflation will continue due to lower consumer demand

Baku. 15 May. REPORT.AZ/ This year digit inflation in Azerbaijan will be ambiguous, at worst. Although after the February 34% devaluation predicted double-digit inflation, given the current market conditions it is expected that the annual rate of inflation has reached 10%.

According to analyst group of Report News Agency, due to the macroeconomic indicators for April, the State Statistics Committee, from the beginning of the year, inflation began to decline gradually in the past month has been replaced by deflation of 0.2%. It should be noted that, in February inflation rate was by 4%, but in March by 0.9%.

"The emergence of deflation, despite the fact that most of the imported products on the market, due to a number of factors. They include the gradual reduction of cash money supply, limiting access to bank resources, the problem of financing in local currency due to the tensions on the foreign exchange market", the analysts of the agency say.

The index of cash money supply (M0) as of April 1 amounted to 7 396.6 million manats. In comparison with the previous month, M0 fell by 7%, from the beginning of the year by 27%.

In the summer months due to seasonal factors in the consumer market there is slowdown in price. This summer in Azerbaijan deflation is expected to accelerate. As of May-July 2014 number of deflation was respectively 0.8%, 1.2% and 0.8%. In August, prices were not changed.

"If the reduction in the money supply will continue and will remain at the current level, as a whole, deflation may end in 2015. The reason for deflation is a decrease in GDP. So, Azerbaijan's nominal GDP for the first quarter was 11 525 million. Manat, which is 12.4 % compared to the same period last year. However, due to the fact that the GDP deflator is calculated based on official statistics indicate that economic growth in the first quarter by 5.3%. Due to the fact that in calculating the deflator plays a major role oil factor, the sharp rise in oil prices since April this year, will have a negative impact on GDP. That is deflator growth will lead to a reduction of GDP. As a result, the negative expectations can deepen and intensify the processes of stagnation in the domestic economy ", experts say.

Research Group of the Report believe that, in order to achieve the economic growth necessary to increase state investment costs or stimulate private sector development. In order to attract foreign investment is necessary to improve conditions in the country. Only in this case it will be possible to eliminate the consequences of the crisis.

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