BAKU, Azerbaijan, April 22. The Russian-Ukrainian armed conflict continues to have a negative impact on the global economy. Due to this, the updated forecasts of international organizations regarding the prospects for further development of the world economy differ significantly from the previous ones.
As a result of geopolitical contradictions, mutual sanctions and embargoes, the global economic landscape has deteriorated significantly, international financial institutions note. The Russian-Ukrainian conflict has exacerbated the situation in the global economy, which hasn’t yet fully recovered from the impact of the COVID-19 pandemic.
Along with the tragic humanitarian consequences, this conflict leads to a slowdown in the global economy and rising inflation. In general, the risks to the global economy have risen sharply, which makes it even more difficult to find compromise solutions in the field of economic policy.
In this situation, the International Monetary Fund (IMF) downgraded its outlook for economic growth in the world from 4.4 percent to 3.6 percent this year. The IMF said that next year the world economy will grow not by 3.8 percent, as expected, but by 3.6 percent. At the end of 2021, this figure was 6.1 percent.
The World Bank (WB), the World Trade Organization (WTO) also stated that the previously predicted growth of the global economy is not expected this year. Although the World Bank initially predicted that the global economy would grow by 4.1 percent this year, now, according to updated expectations, the growth rate will be 3.2 percent at best.
According to the WTO, the world economy is expected to grow by 2.8 percent instead of the previously forecasted 4.1 percent.
Another serious problem is related to inflation. The IMF emphasized that the geopolitical situation negatively affects the prices of goods and food. According to the fund, until 2026, with the exception of a few countries, global employment and production will be below pre-pandemic levels. Inflation is also expected to remain high for a longer period than previously thought, reaching 5.7 percent in developed countries and 8.7 percent in developing countries in 2022.
As for the forecasts of international organizations on the Azerbaijani economy, according to the updated IMF forecast, this year the country's economy will grow by 2.8 percent. Although the previous IMF forecast for this year indicated growth of only 2.3 percent.
According to the updated forecast of the Asian Development Bank, which is one of the authoritative international financial organizations, this year the real GDP growth rate in Azerbaijan will be 3.7 percent. This is 1.2 percentage points more than the bank's previous forecast. According to the latest WB forecast, real growth will be 2.7 percent.
According to the forecasts of the Ministry of Economy of Azerbaijan, this year the growth of real GDP will be 3.9 percent. However, against the background of last year's results, a higher level of economic growth cannot be ruled out. The GDP growth rate last year was above the forecast - 5.6 percent instead of 3.4 percent. The results of the first quarter of this year also indicate the continuation of the success achieved by Azerbaijan in the economic sector during 2021. According to the results of the first quarter, GDP grew by 6.8 percent.
Growth in the non-oil sector amounted to more than 10 percent. The non-oil industry achieved growth of more than 18 percent. Maintaining these rates does not exclude that the growth of the Azerbaijani economy this year will exceed forecasts.
The high price of energy resources in the world markets, the dynamic development of the non-oil sector promise more favorable prospects for the Azerbaijani economy. According to the latest IMF report, the average oil price this year will be 54.7 percent higher than the previous year, at $106.83 per barrel.
At the same time, in the state budget of Azerbaijan for this year, the price of oil was set at $50 per barrel. The IMF said that the pace of growth in natural gas prices will continue in 2022, and the price for it will increase by 147 percent compared to last year. The high price of oil and gas will increase Azerbaijan's foreign exchange earnings and have a positive impact on the country's economic progress.
The Azerbaijani economy will maintain growth dynamics in the non-oil sector as well. In the first quarter of this year, Azerbaijan's exports in the non-oil sector amounted to $727.2 million, which is an increase of $225.6 million or 45 percent compared to the same period last year.
Against the backdrop of economic growth in Azerbaijan, the material well-being of the population has also increased. The measures taken by the government in this direction are yielding positive results. All this further strengthens the country's economic power.