WB announces economic growth outlook in Azerbaijan

The World Bank (WB) has kept its forecast for GDP growth in Azerbaijan stable this year and next, Report informs, citing the June issue of the WB's Global Economic Prospects.

The World Bank has kept Azerbaijan's economic growth forecast for 2022 and 2023 unchanged at 2.7% and 2.2%, respectively, compared to April.

The World Bank expects Azerbaijan's GDP to grow by 2.3% in 2024.

"In ECA countries outside Eastern Europe, growth is expected to be weakened in most countries in Central Asia and the South Caucasus because of tight economic linkages with the Russian economy. In both subregions, growth is projected to about halve in 2022 from 2021, falling to 2.4 percent in Central Asia and 3.4 percent in the South Caucasus.

"Although higher global commodity prices should provide windfalls that help cushion activity in some economies (Azerbaijan, Kazakhstan, Uzbekistan), these benefits are likely to be limited. An important reason is supply constraints, with the oil sector already operating close to capacity in Azerbaijan and an earlier disruption to a major pipeline in Kazakhstan.

"More broadly, sharp reductions in external demand and remittances from Russia are likely to form a larger drag on some of these economies than the gains from higher commodity prices.

"Central Asia, sanctions on Russia imposed in response to Russia's invasion of Ukraine pose challenges to financial intermediation. The war is magnifying other vulnerabilities also, including risks of debt distress in the Kyrgyz Republic and Tajikistan. Both countries are expected to experience output contractions this year, wider fiscal and external current account deficits, and sharp currency depreciations," the report says.