BAKU, Azerbaijan, July 26. The inflation rate in Azerbaijan in 2022 is expected at 13 percent, gradually falling to 5 percent through 2025, Trend reports, citing S&P Global Ratings.
“Like most other emerging and advanced economies, Azerbaijan's inflation has continued to exceed our previous forecasts, surpassing levels exhibited over 2016-2017, when prices rose significantly following the 2015 manat devaluation. Current upward price pressures are driven by the effects of post-pandemic reopening, food price inflation, and global trends given that Azerbaijan imports a wide range of goods from abroad and is significantly affected by foreign inflation developments,” the report said.
Also, S&P assumes that the Azerbaijani manat’s exchange rate will remain at 1.7 AZN/$1.
“Nevertheless, in our view, should hydrocarbon prices drop sharply and remain low for a prolonged period, the authorities could consider allowing the exchange rate to adjust. This would help avoid a substantial loss of foreign currency buffers similar to that experienced by the central bank in 2015,” the agency noted.
In addition, according to the agency, Azerbaijan's GDP growth in 2022 is projected at 3.5 percent, after a strong rebound of 5.6 percent in 2021.
Meanwhile, S&P Global has affirmed its 'BB+/B' long- and short-term foreign and local currency sovereign credit ratings on Azerbaijan with a stable outlook.
---
Follow the author on Twitter: @mariiiakhm