Baku, Azerbaijan, May 15
The inflation rate at 2.4 percent in January-April 2019 is acceptable for Azerbaijan and this is considered a good indicator, economist Elman Sadigov told Trend on May 15.
“If we take into account the events occurring in the region, economic processes in Turkey, Russia, Europe and eastern countries, and the tension in the global economy, this is a good indicator,” he said.
"The reason behind the success achieved in the inflation indicator is the prices in the world market,” Sadigov said. “The oil price in the world market is even higher than the one planned in the budget, which allows for getting a positive balance in the balance of payments and creating an opportunity to cover all budget expenses in a timely manner.”
He added, “But as the country, we cannot be satisfied with a good indicator of inflation, as the pace of the country’s development depends on the diversification of the economy and export and the growth in production volume."
In his words, an excessively low rate of inflation is undesirable for developing countries.
“The inflation rate at 3–4 percent for such countries as Azerbaijan is in fact more acceptable,” he said. “This is an impetus for the rapid growth of the economy, in particular, of the non-oil sector. The inflation rate at two percent is more favorable for developed countries. We focus on an increase in production and export in the non-oil sector; otherwise, if the oil price falls, we will be unable to keep inflation rate at a low level."
Sadigov noted that in economics, inflation is often compared with blood pressure. It is dangerous both at a high and a low level.
"There is an acceptable level of inflation for each country. For example, five-percent-inflation may create problems for Europe because the economy is developed in the European countries,” he said. “Meanwhile, inflation rate at 3-4 percent in Azerbaijan, as in a developing country, intensifies the economy. Therefore, inflation rate below 2.4 percent may create stagnation in the country's economy".