BAKU, Azerbaijan, Nov. 2
By Sadraddin Aghjayev - Trend:
Inflation has been caused in Azerbaijan only by external reasons, Deputy Head of the Research Department at Russian Gazprombank Gulnara Khaidarshina told Trend .
Khaidarshina stressed that the acceleration of inflation has become global and is not a problem for any country.
“Inflation is being accelerated not only in Azerbaijan but also in other CIS countries, even in the US and the eurozone,” the deputy head of the research department said. “This is mainly connected with to the rise in the world food prices amid COVID-19 pandemic and unfavorable weather conditions in certain countries.”
“For example, we estimated the correlation between the growth of consumer prices in Azerbaijan and the world food inflation,” Khaidarshina added. “According to our calculations, it is high and reaches 87 percent, two months behind.”
“That is, the acceleration of the world food inflation affects the growth of domestic consumer prices on average in two months,” the deputy head of the research department said.
Khaidarshina said that the acceleration of inflation on a global scale and the rise in the cost of goods which are imported to Azerbaijan are also facilitated by the lack of supply of goods amid the disruption of global supply chains and an increase in tariffs for international transportation, primarily, container transportation in connection with COVID-19 pandemic.
“Moreover, energy products are becoming more expensive,” the deputy head of the research department said.
The deputy head of the research department added that thus, inflation factors are mainly external in nature and it is difficult to influence them, including the lack of global supply of goods, only by raising the domestic refinancing rate.
Khaidarshina said that the increase in the rate in this situation is aimed at ensuring macroeconomic stability, while in addition to it, non-monetary measures may be required to increase the supply of goods on the domestic market and reduce the cost of import, for example, by reducing import customs duties.
“Taking into account the good recovery of the Azerbaijani economy and the rather big gap between inflation rate and the refinancing rate, it would be more correct to close this gap gradually, as the Central Bank of Azerbaijan (CBA) is doing now,” the deputy head of the research department said.
"A sharp one-time increase in the rate could and would allow to quickly return the real rate to the zone of positive rates, but it could slow down the economic recovery, which we are now observing,” the deputy head of the research department added. “We expect big growth of the Azerbaijani economy by 5.1 percent by the end of the year.”
Khaidarshina said that now Gazprombank does not see any pressure on deposits in the Azerbaijani national currency.
The deputy head of the research department said that on the contrary, according to the CBA, the deposits of the population in Azerbaijani Manat showed good growth of 23 percent from January through September 2021.
“I think that as for Azerbaijan, the initial condition for the positive dynamics of deposits in the national currency is the maintenance of a stable exchange rate of the Azerbaijani Manat, which we are seeing now,” Khaidarshina said.
“I would like to stress that the head of the CBA has recently said at a press conference following the meeting on the exchange rate that he does not see any risks to the stability of the Azerbaijani Manat this year or next year,” the deputy head of the research department said.
Khaidarshina thinks that this will help maintain low devaluation expectations of the market participants.
The deputy head of the research department said that one must not forget about the good situation in the world hydrocarbon market, which supports the balance of foreign trade of Azerbaijan and the national currency.
Khaidarshina stressed that before the increase in the refinancing rate on October 29, 2021, the inflation rate exceeded the rate by 200 basis points in Azerbaijan.
“Thanks to an increase in the rate by 50 basis points to seven percent, this gap decreased up to 150 basis points,” the deputy head of the research department added.
“At the same time, the CBA has informed that it is ready to raise the rate at its next meetings, so the difference between the inflation rate and the refinancing rate is likely to more decrease in December,” Khaidarshina said.
“This, as well as the CBA's clearly outlined intention recently to raise the rate to ensure macroeconomic stability, will support the attractiveness of deposits in the national currency,” the deputy head of the research department said.
-----
Follow the author on Twitter: agdzhaev