BAKU, Azerbaijan, Feb.1
By Leman Zeynalova - Trend:
There might be some stabilization in the oil production in Azerbaijan along with an increase in gas production and exports, which will help oil-GDP, the Black Sea Trade and Development Bank (BSTDB) told Trend.
And, depending on the pace and effectiveness of the vaccination, there might be a strong bounce back in tourism, said the Bank.
“Azerbaijan’s GDP was down 4.3 percent in 2020, as oil production fell by almost 8 percent, tourism contracted by more than 50 percent and the construction sector remained in the negative territory. Fall in the oil production was expected anyway, as the fields age their capacity declines. Additionally, Azerbaijan committed itself to OPEC+ decision to lower oil production to keep oil prices up. Tourism suffered all over the world, as the governments opted for strict lockdowns to minimize virus.”
Given the persistent volatility, fed by the uncertainties regarding vaccination pace, new modifications of the virus, and questions related to “re-balancing” in the economy, making forecasting is a challenging job and subject to quick revisions, according to BSTDB.
“The vaccination process will likely have an impact on domestic trade, travel, transportation, and all other sectors. So, there is no reason to question official projections of 3.4% growth in 2021. Depending on the various factors, it might come up both either above or below this number.
Major risks stem from vaccination pace and effectiveness. And, as we already mentioned, it will have an impact on tourism and other sectors. Another major and persistent risk for Azerbaijan, as usual, is the oil price. As long as there is some coordination among OPEC+ members and if we see a rebound in the global economy, oil prices will likely stay above the officially projected conservative figure of US$ 40.0 per barrel as many analytics now forecast the price to exceed US$ 50. Also, the completion of the Southern Gas Corridor and the start of the gas exports to Europe through the TAP pipeline is another important positive factor.”
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