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WB Expects Increase of GDP in Mid-Term Outlook in Azerbaijan

Business Materials 15 January 2007 17:05 (UTC +04:00)

Due to the continuation of rapid growth in the oil sector of Azerbaijan's economy, the World Bank (WB) forecasts an increase in Gross Domestic Product in the mid-term outlook.

Quoting the recently-issued WB Partnership Strategy with the Azerbaijan Government for 2007-2010, Trend reports that the growth of actual GDP for 2006-2008 is expected to be at a level of 24%.

Amid the reduction in oil-related investments, the Government will speed up its activity with the reconstruction of its infrastructure which has not been given much consideration for 10 years.

However, the increase in the actual efficient rate due to the increase in oil revenue and fiscal situation is one of the serious tasks facing the growth in the non-oil sector.

According to WB experts, the State Budget 2006 reflects a serious fiscal expansion. At the expected increase of GDP by 42 %, the increase in the current expenditures exceeds 60 % and the state investments a triple increase. At a deficit in the non-oil sector in 2005, the non-oil GDP increased by 11 % and exceeded 30 % in 2006.

The macro-economic frames for 2006-2010 are given below:

Macroeconomic Frame

2005

2006

2007

2008

2009

2010

Growth of Real GDP (in %)

26.4

24.6

27.1

19.9

11.6

5.7

Growth of Real Non-Oil GDP (in %)

8.4

8.9

8.4

8.1

6.8

6.8

Inflation Rate (in %)

9.7

13.0

17.0

17.0

13.0

10.0

Gross National Income per Capita (in USD)

1,240

1,650

2,400

3,330

3,940

4,450

Balance of Current Accounts

1.3

14.4

21.3

25.0

24.4

21.3

Real Foreign Direct Investments (in USD)

459

-1,539

-4,120

-1,456

-667

81

Summary Fiscal Balance

2.7

7.5

8.5

24.5

27.0

24.7

Summary Fiscal Balance (without SOFAZ)

-2.3

-7.2

-13.8

-17.8

-16.1

-14.1

Summary Budget Revenues

26.5

40.8

45.3

63.9

64.7

61.4

Summary Capital Investments

44.1

39.7

36.6

36.4

36.0

37.3

Foreign (External) Debt вЂ" Unpaid Rest

15.0

10.5

8.9

7.9

7.5

7.8

Ration between Foreign Debt Service and Export (in %)

2.6

0.9

0.9

0.8

0.8

0.9

Price on Crude Oil (in USD per Barrel)

53.4

65.3

60.1

56.1

52.5

49.1

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