Baku, Azerbaijan, Nov. 18
By Maksim Tsurkov - Trend:
After increasing by over threefold, Azerbaijan's economy has become one of the world leaders in terms of development for the last ten years, the chairman of the Central Bank of Azerbaijan (CBA) Elman Rustamov said while discussing the draft law on "State budget for 2015" in the parliament.
"It has also demonstrated resilience and stability this year," he said.
Rustamov said that the draft state budget for 2015 is being discussed amid uncertainty and instability of the global economy.
"The thorough measures were taken in many developed countries to revitalize the economic growth," he said. "The world's leading countries have recently normalized the situation with the budget deficit and public debt through the state spending sequestration and fiscal consolidation. But as a result, the loss of the economic growth dynamics was observed."
He said that taking into account the tense geopolitical situation in the world, the IMF and other international financial institutions have lowered the forecasts for the economic growth of many countries.
"The April forecasts for the developed countries have remained at the level of 1.8 percent in 2014, while this forecast for the developing countries has been lowered," the CBA head added.
The prices for goods have dropped at world markets in 2014, according to Rustamov.
The world price index for goods has decreased by over eight percent in the first nine months of 2014, he added.
"Meanwhile, the price index for food products has dropped by 8.5 percent, while the prices for the metal have decreased by almost 10 percent," Rustamov said.
He said the oil prices which are of interest for Azerbaijan in terms of its macroeconomics, have decreased by approximately 20 percent.
"On the one hand, we see increase in oil production of non-OPEC countries and on the other hand, the production volume drops in the main oil-producing countries," he added.
"Thus, the fall in price is caused by demand and supply," Rustamov said.
He went on to add that Azerbaijan uses counter-cyclical approach to the economic analysis.
"There are pro-cyclical and counter-cyclical approaches to the analysis in the economic practice. The economy is developing cyclically and the economic expansions alternate with recessions," he said.
Rustamov went on to add that the pro-cyclical approach means that if today the oil price is high and the situation of a country or a financial institution is good, then it will spend a lot of money and will not accumulate reserves.
"The counter-cyclical approach means that if the oil prices are high, and a country or a financial institution gets a good income, they think about the future and are stocking up reserves," he added. "Over the past 10-15 years, the Azerbaijani economy is using the counter-cyclical approach."
Rustamov also said the level of savings is very high along with a large volume of financing for infrastructure projects, and Azerbaijan's strategic currency reserves allow the government not to slow the economic development pace, given sudden changes in the oil price, and to continue to fund various projects, as well as to fulfil commitments.
He said that there are no fundamental reasons for the fall in oil prices to continue for a long period of time. "One of the world's leading financial institutions, the IMF, predicts oil prices for 2015 at about $90 per barrel," said the head of the CBA. "In 1998, the price of oil dropped to $8 per barrel, in 2008 the prices fell from $150 to $35 for a short period of time. And all this continued for quite a short time. In both cases, Azerbaijan has demonstrated resilience and stability of the economy. I am sure that the strong economy of Azerbaijan is ready for these processes this time as well, despite the drop in oil prices."
The official exchange rate for November 18 is 0.7845 AZN / USD.