S&P: Azerbaijani manat to remain stable against US dollar until 2028

International rating agency S&P Global Ratings forecasts Azerbaijan's average annual inflation rate to be at 2% in 2024, Report informs, citing the agency.

In 2023, the country's average annual inflation stood at 8.8%.

The agency's updated projections suggest that Azerbaijan's average annual inflation will accelerate to 4% in 2025 but slow down to 3% per year in 2026-2027.

S&P predicts that Azerbaijan's current account surplus will be 6.9% of GDP by the end of 2024, down from 11.5% of GDP in 2023.

The surplus is expected to further decrease to 2.7% of GDP in 2025 and 1.2% of GDP in 2026. By 2027, the current account is projected to have a deficit of 0.2% of GDP.

The agency believes that the Azerbaijani manat's exchange rate against the US dollar will remain unchanged until 2028.

"We forecast that Azerbaijan will maintain the manat's peg to the US dollar at 1.7 manat per 1 dollar, supported by regular interventions by the authorities in the foreign exchange market," S&P noted. However, if hydrocarbon prices fall sharply and remain low for an extended period, the agency assumes that the authorities will consider adjusting the exchange rate to protect the Central Bank's foreign exchange reserves from significant decline.

Azerbaijan's average annual inflation in January-October 2024 was 1.7%. Azerbaijan's Ministry of Economy forecasts the country's average annual inflation to be 2.7% in 2024, 4.6% in 2025, 4% in 2026, and 3.8% per year in 2027-2028.