ADB Renews Economic Growth Forecast for Azerbaijan in 2008, 2009

Business Materials 20 October 2008 19:03 (UTC +04:00)

Azerbaijan, Baku, 20 October / Trend corr. I.Ismayilova/The Asian Development Bank (ADB) has reconsidered the forecasts of GDP growth in 2009 for Azerbaijan from 18% to 14% because of smoothing of oil production growth and change of directions of expenditure on public demands, which earlier kept growth in the oil sector, is stated in the report by ADB for 2008 for the countries of Central Asia and Caucasus.

In the first half of 2008, the GDP growth rate totaled 16.5% taking into consideration oil and non-oil sectors. The growth of non-oil sector is based on expansion of the construction sector, retail and wholesale trading.

"In the third quarter, the risk to touch the lowest GDP growth forecast for 2008 (15.7%) has unexpectedly increased due to the conflict in Georgia, which reflected the oil transit from Azerbaijan. Nobody knows will the oil pumping be accelerated during the next months, when the situation will become normalizing," ADB experts said.

The renewal is also envisages reconsideration of the inflation forecast for 2008 and 2009 from 13% and 12% to 16% and 18% due to the accelerated foodstuff process increase, high expenditure on public needs and money supply growth.

The high expenditure growth on social needs cause increasing of unclaimed goods demand. ADB is also concerned with the rapid increase in crediting at the expense of foreign borrowings by banks and expansion of the basis of manat.

"There are two contradicting factors in payment balance forecast: -the hydrocarbon prices will remain on high rates and the oil export might face danger due to the continuing tension in the region. In such uncertain climate the forecast keeps the planned proficite of the current account for 2008 and 2009 on the 38% and 40% rates to GDP accordingly," is stated in the report by ADB.

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