Baku, Azerbaijan, April 29
Trend:
Azerbaijan's oil GDP volume will grow by five percent in 2019 according to the forecast of International Monetary Fund (IMF), Trend reports on April 29.
IMF data show that the national oil GDP volume will reach $45.2 and $47.4 billion in 2019 and 2020 respectively. “The launch of a new gas pipeline, the reorientation of budget expenditures to the domestic economy and the continued improvement in the services sector will contribute to Azerbaijan’s economic growth,” a representative of IMF said. “A fall in the inflation rate opens up opportunities for mitigating monetary policy in Azerbaijan.”
According to IMF, Azerbaijan has announced the transition to inflation targeting, which results in less stringent exchange rate regimes. The strengthening of financial institutions and fundamentals including the adoption of fiscal rules, have contributed to the improvement of the macroeconomic management.
Taking into account Azerbaijan’s economic development growth in the Caucasus and Central Asia, IMF forecasts the growth pace at 3.4 and 3.1 percent for 2019 and 2020 respectively. “The economic growth will be mainly compensated through an increase in gas production in Azerbaijan. Meanwhile, inflationary pressure is also weakening and prices are expected to decrease,” the source added.
“To increase resilience and support the economic growth, many Caucasian and Central Asian countries must give priority to the restoration of the financial sector by strengthening the regulatory and supervisory framework, improving corporate governance in banks and strengthening the judicial and legal systems,” the IMF forecast states. “It would also be useful to fully modernize the monetary policy framework and make exchange rates more flexible.”
According to the forecast, more efforts are to be made to carry out fiscal consolidation to stimulate economic growth in order to restore the required buffer reserves. Special attention must be paid to the proper governance and the fight against corruption for many of these efforts to be effective.
Finally, the structural reforms that contribute to the development of the private sector and the diversification of the economy still play a significant role in ensuring higher rates of the comprehensive economic growth, the forecast suggests.
Azerbaijan’s oil GDP volume grew by 0.6 percent in 2018, IMF said. According to the forecast, Azerbaijan's non-oil GDP volume will grow by 2.4 percent and 2.5 percent in 2019 and in 2020 respectively.
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