BAKU, Azerbaijan, November 4
By Nargiz Sadikhova - Trend:
The GDP growth in Azerbaijan has been stronger than expected on the back of rising oil and gas prices, Trend reports citing the Regional Economic Prospects report by European Bank for Reconstruction and Development (EBRD).
The GDP growth accelerated to 4.8 percent year-on-year in the period January to September 2021, mainly driven by non-oil sector growth of 6.2 percent, said the report.
However, oil production is rising only gradually in line with Azerbaijan’s commitments to the agreement of OPEC+.
Therefore, oil and gas GDP growth remained moderate at 1.4 percent in the same period.
Favorable hydrocarbon prices helped turn the current account into a surplus in the first quarter of 2021. In spite of currency stability, rising global prices of commodities and logistics services caused inflation to accelerate to 8.5 percent year-on-year in September 2021.
As the inflation rate exceeds the target of 4 percent +/- 2 percent, the Central Bank of Azerbaijan decided to raise the discount rate by 25 basis points to 6.5 percent in September. Rising demand and higher prices of oil, supported by an expected continuation of gradual increase of oil production quotas, will support overall economic performance in the second half of 2021.
On this basis, the economy is expected to grow by 4 percent in 2021 and 3.2 percent in 2022. This forecast is subject to risks related to structural weaknesses of the economy, geopolitical developments and possible volatility in commodity prices.
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