Baku, Azerbaijan, Sept. 27
By Azad Hasanli – Trend:
An expected stabilization of Azerbaijan’s currency [manat] and prices for imported goods should sharply reduce inflation in the country in 2017, according to an updated ADB report.
Inflation in Azerbaijan will be 12 percent in 2016, but it will fall by more than twice in 2017 – to 5.2 percent, according to the ADB forecast, which was left same as in the previous report.
The Asian Development Bank (ADB) expects Azerbaijani economy to grow in 2017 by 1 percent. The new forecast is the same as in the previous ADB report.
The ADB also predicts a 2.5-percent reduction in Azerbaijan’s economy in 2016 as compared to the 1-percent decline in the previous report.
The deep slump in oil prices has pushed debt ratios higher for oil exporters, according to the report. Economies in Central Asia in particular have experienced slowing GDP growth and sharp currency depreciation under stubbornly low oil prices, the report noted.
Countries with large oil funds can use them as financial buffers to support debt sustainability and market confidence, drawing them down to uphold ongoing efforts toward socioeconomic reform and diversification, according to the report.
“In Azerbaijan, for example, the local currency depreciated by half against the US dollar from 2014 to 2015, but the country has an oil fund [State Oil Fund of Azerbaijan – SOFAZ] worth nearly $37 billion”, the report said. “It can provide a strong buffer to substitute for debt financing and keep the public debt ratio from rising above 40 percent, even if oil prices are slow to recover.”