S&P expects Azerbaijan’s current account to reach significant surplus in 2012

S&P expects Azerbaijan’s current account to reach significant surplus in 2012

Azerbaijan, Baku, Aug. 21 / Trend I.Khalilova /

Standard & Poor's expects Azerbaijan's net general government asset position to account for 59 percent of GDP in 2012, and 62 percent of GDP in 2013.

"We believe this compares favorably with all peers as well as the 'BBB' median (Kazakhstan, Russia, Morocco, Panama, Peru and Columbia), which is expected to have a net debt position equivalent to 35% of GDP in 2011," the agency told Trend.

Azerbaijan's net general government asset position is estimated to have reached 53% of GDP in 2011 (up from 6% in 2007).

For the purposes of the report Azerbaijan's peer group includes the oil-rich CIS countries in the 'BBB' rating category, such as Kazakhstan (foreign currency BBB+/Stable/A-2;) and the Russian Federation (Russia; BBB/Stable/A-3). In addition, the Kingdom of Morocco (BBB-/Stable/A-3), the Republic of Panama (BBB-/Positive/A-3), the Republic of Peru (BBB/Stable/A-3) and the Republic of Colombia (BBB-/Stable/A-3) are comparable peers. In December 2011 Azerbaijan was assigned investment rating BBB-/Stable/A-3.

According to the agency, the ratings on Azerbaijan are mainly supported by its comparatively strong current account surpluses and increasing general government assets. The Azeri government's borrowing requirements have been lower than the peer group average, due to stronger macroeconomic and fiscal performances than many other 'BBB' rated sovereigns.

Azerbaijan's consolidated general government is expect to post a budget surplus of 14% of GDP in 2011 and 10% in 2012, before transfers to SOFAZ, which compares very favorably with all peers. This is far better than any peer (2.6% for the 'BBB' median), including oil-producer Kazakhstan whose fiscal surplus in 2011 was an estimated 4% of GDP.

"We expect the current account to have reached a significant surplus of 22% of GDP in 2011. With the continued elevation of oil prices above or close to $100/barrel, this surplus should remain high (in 2012 - 18.8 percent, 2013 - 19.7 percent and in 2014 - 18.5 percent),
which would further bolster Azerbaijan's external position relative to peers.

Similarly, given that SOFAZ acts as the country's sovereign wealth fund and invests all of its assets abroad, Azerbaijan is in an exceptionally strong external asset position. With narrow net external assets equal to 107% of CARs, Azerbaijan's external liquidity is significantly
stronger than any of its peers, including other oil producers Russia (26.9%) or Kazakhstan (27.0%).

"Trend GDP growth has moderated, but will remain in line with peers. We estimate that GDP growth virtually came to a standstill in 2011 at 0.1% and will rebound to 3.0% in 2012, as maintenance work on the main oil field is completed and production increases again. Nevertheless, Azerbaijan's era of extremely rapid economic growth is not expected to return," the agency's analysts believe.

High real growth rates were also mirrored by high per capita growth rates. From 2005-2010, per capita growth averaged 17.0%, compared to 2.7% for the 'BBB' median and 6.3% for Panama, the best performing peer.

"Looking ahead, we forecast per capita growth to average 3.2% in 2012-2014, in line with the 'BBB' median of 3.0% but behind most of its peers, particularly commodity-based Kazakhstan and Russia, which have much lower population growth," the agency noted.

Future growth should, in S&P view, remain underpinned by FDI in the oil sector, rising hydrocarbons production and exports, as well as strong government spending which in turn will support expected strong non-oil growth prospects.

"We expect GDP per capita to increase to $7,063 in 2012, significantly lower than in Kazakhstan and Russia, as well as the 'BBB' median ($11,697), but comparing well with Morocco, Colombia, and Peru," the agency's experts believe.

S&P believes diversification is crucial to making the Azeri economy more resilient against external shocks. "Compared with its regional and nonregional peers, Azerbaijan's economy is less diversified, with the hydrocarbon sector (including gas) accounting for around 92% (in 2011) of total exports and about 40% of GDP (not counting ancillary industries). These concentrations are higher than those estimated for Russia (about 64% of total good exports in 2011) and Kazakhstan (about 60% of good exports and 25% of GDP in 2011). All other peers are significantly more diversified," S&P notes.

The government has invested heavily in infrastructure to spur the non-oil economy and reduce regional income disparities.

"Nevertheless, the Azeri economy remains narrowly based and dependent on commodities, which leaves it vulnerable to external shocks. This is similar to Kazakhstan and Russia, which also export significant volumes of commodities that are sensitive to international price fluctuations. Continuing FDI inflows will be crucial to developments in GDP and per capita growth, and, in this respect, Azerbaijan's prospects are stronger than those of many of its peers," S&P says.

Moscow hosts trilateral meeting on Karabakh
Moscow hosts trilateral meeting on Karabakh
Despite events in Armenia, it's necessary to continue implementation of agreements on Nagorno-Karabakh -  Russian official
Despite events in Armenia, it's necessary to continue implementation of agreements on Nagorno-Karabakh - Russian official
Supplies of 'Iskander' missiles to Armenia must be stopped – Russian expert
Supplies of 'Iskander' missiles to Armenia must be stopped – Russian expert
Loading Bars
Latest
Kazakhstan determines priorities of foreign policy
Compliance services become more relevant in Azerbaijan - PASHA Bank
Several servicemen killed in military helicopter crash in Turkey
Azerbaijan doing everything to create new transport infrastructure in South Caucasus – Russian analyst
New reality created in South Caucasus - head of department at Istanbul Kadir Has University
Demining of Azerbaijani lands complicated by Armenia’s refusal to provide maps of minefields - Expert
Long-awaited end to Karabakh conflict creates new opportunities - Former US ambassador to Azerbaijan
Azerbaijan shows footage from Kechikli village of Zangilan district (VIDEO)
Azerbaijan interested in strengthening export and investment potential with Argentina
President Aliyev gives speech at virtual Summit of Economic Cooperation Organization
MFA shares potential sectors of Lithuanian investment in Georgia
Georgian kiwi enters Japanese market
Azerbaijan's ENGINET company talks unique solutions for local market
Kazakh gold extracting venture opens tender to buy spares
Kazakhstan intends to attract funds to improve energy efficiency of facilities
Volume of food products sold in Baku's trade network increases
Georgia shows progress in curbing coronavirus cases - WHO
Azerbaijani Finance Ministry allocates funds for maintenance services
Restaurant business subsidizing program launched in Tbilisi
UK's Johnson says Brexit problems in Northern Ireland are solvable
Supporting Member Country ECAs: ICIEC endorse supportive reinsurance treaty with JLGC
Uztekstilprom, French Proparco talk profitable financing for textile projects
Georgian consulting company launching project for female entrepreneurs
Georgian wine export to US down
Russia and Azerbaijan lead in import of electricity to Georgia
Several low-cost airlines resume flights to Georgia
Azerbaijan-Belarus foreign trade operations for Jan. 2021 revealed
Azerbaijan confirms 124 more COVID-19 recoveries
Kazakhstan increasing control over development of oil and gas fields
State property privatization plan in Georgia surpasses initial plan
Several containers with cargo to pass through Azerbaijan along BTK railway - ADY Container
Rehabilitation centers can be established in Azerbaijan's liberated lands - Agency
Azerbaijan discloses number of imported cars in 2020
Uzbekistan’s 1M2021 profit for banks increases
Germany approves AstraZeneca for over-65s
New plant to be commissioned in Baku
Azerbaijan to receive Astra Zeneca vaccine via COVAX mechanism - WHO
Turkmengas opens again tender for operation of video surveillance system
Uzbekistan, Belarus agree to expand range of mutually supplied agricultural products
Uzbek currency rates for March 5
Italian Eni launches implementation of its solar energy project in Kazakhstan
Ensuring security in Karabakh our top priority - Turkish president
Georgia eyes to select new investor for Anaklia port
Creation of Kazakhstan-Azerbaijan Business Council under discussion
Covaxin demonstrates prowess of Atmanirbhar Bharat, says ICMR chief
India, Philippines sign key defence pact, set ball rolling for BrahMos missile sale
Turkey supports Georgia in deepening relations with Euro-Atlantic structures
Moldova Post plans to develop co-op with Turkmenistan in field of postal services
Georgia preparing for issuance of new Eurobond
Europe reviewing Russia's COVID-19 vaccine
German companies interested in funding Azerbaijan's railway projects
Uzbekistan to launch production of electric scooters in Fergana region
Azerbaijani State Customs Committee chairman names most-imported products for 2020
India, Norway to work together in marine spatial planning
PM Modi may launch trading points, connectivity projects in Dhaka
India to fund NRs 246 million for reconstruction of Cultural Heritages in Nepal
Kazakhstan, Tajikistan resuming mutual air traffic
Several ships and related facilities to be launched in Iranian ports
Iran reveals COVID-19 data for March 4
Azerbaijani FM’s letter to UN sec-gen disseminated as document of organization
Kazakhstan increases imports of Iran-made goods
Georgia plans to create new economic development plan
Baku Statistical Department discloses Jan. 2021 volume of paid services to citizens
Electricity production in Georgia to increase after Namakhvani HPP is ready
Uzbekistan reveals volume of industrial production for Jan. 2021
Students and graduates of Baku Higher Oil School shown high results in entrance exams for master's degree programs
Azerbaijani PASHA Bank eyes attracting IT companies to implement joint projects
Azerbaijani banks' demand at foreign exchange auction decrease
Iran’s Bahar Azadi gold coin price fell
Azerbaijan, Turkey to hold joint military exercises (PHOTO)
Turkish foreign minister to visit Uzbekistan
Volume of cargo loaded, unloaded in Iran’s Dayyer port revealed
Kazakhstan’s Ulba Metallurgical Plant announces tender to buy accumulators
Moldova Post talks details of postal communication resumption with Turkmenistan
Buta Airways to launch ticket sales for Baku-Istanbul-Baku Flights
Iran Khodro Company expects to meet forecasts
Azerbaijani IT company seeks to promote smart home systems abroad
Iran declares data of exports, imports via Astara port
Several mines produced by Armenia found in Azerbaijan’s Aghdam district - Trend TV reports
Azerbaijan releases 2M2021 data on transactions of local investment companies'
EU delegation's head talks interest in raising Azerbaijani regions' financial inclusion
Most of construction work in Baku during Jan. 2021 carried out by private companies
BlackRock builds 5% stake in Toshiba, becomes third largest shareholder
Iran discloses volume of rapeseed to be harvested
Azerbaijan, Iran negotiating to open customs post on border, in Khudaferin village
Uniper sees increase in generation capacity
EU invests in micro-entrepreneurship dev't in Azerbaijani districts
Azerbaijan gives update on number of COVID-19 vaccinated citizens
Turkmenistan to expand production of Balkanabat iodine plant
Azerbaijan expects creating new broadcasting opportunities for Internet TV, radio channels
Belarus excludes Azerbaijan from list of countries with heavy COVID-19 situation
Israeli identity validation co Identiq raises $47m
Kazakhstan boosts trade turnover with India despite COVID-19
Industrial oil inflow received at Turkmen field
Exxon and Macquarie in $11.7 billion U.S. lawsuit over gas contract
China boosts steel imports from Turkey
Georgia reports 133 new cases of coronavirus for March 4
Azerbaijan considers joint military exercises with Pakistan - President Aliyev
Azerbaijan wants peace and is promoting peace today - President Aliyev
President Aliyev: We hope Pakistan will join existing, emerging transport routes Azerbaijan
All news