BAKU, Azerbaijan, August 6. Azerbaijan’s real GDP growth is expected to reach 4 percent in 2022, Trend reports via the outlook from Moody’s Investors Service.
“After having demonstrated resilience throughout the coronavirus pandemic – resulting in a smaller recession than peers and maintaining a stable currency – Azerbaijan entered the Russia/Ukraine crisis with a strong economic recovery bolstered by high hydrocarbon prices,” the report said.
According to the outlook, Moody's expects the Central Bank of Azerbaijan (CBA) to maintain its de facto peg to the US dollar for the foreseeable future.
“Moody's expects recent improvements in institutional capacity to mitigate pressure from soaring inflation, which surpassed 14 percent this year including almost 20 percent for food. In response, the CBA has increased policy rates by 150 basis points to 7.75 percent since September 2021 and raised reserve requirements. Following enhanced macroeconomic policy and exchange rate management that have underpinned macro and external stability in recent years,” the report noted.
Furthermore, Moody’s believes that Azerbaijani government has additional budgetary reserves to provide targeted cash transfers to low-income households if required. In addition, high hydrocarbon prices constrain household incomes and social risks, while public sector wages also rose in 2021.
---
Follow the author on Twitter: @mariiiakhm