BAKU, Azerbaijan, Feb.2
By Zeyni Jafarov – Trend:
Against the backdrop of rising energy prices and a gradual increase in production volumes, Azerbaijan's economy is expected to grow in 2021 and 2022 at the initial stages by 3 percent, Sofia Donets, Senior Economist of the Russian Renaissance Capital investment company for the CIS, told Trend.
According to Donets, despite the slowdown in the Azerbaijani economy during 2020, the significant reserves of the State Oil Fund of Azerbaijan (SOFAZ) balanced the budget at a minimum deficit level of 2.4 percent of GDP, as well as supporting the regime of the fixed exchange rate in 2020.
Donets noted that inflation in Azerbaijan during 2020 was moderate amid the stability of the national currency.
“However, in our baseline scenario, in which the price of Brent oil will be at $50 per barrel, Azerbaijan needs to devalue the national currency from 1.7 AZN/USD to 1.85 AZN/USD in order to balance the external and fiscal position. In the case of a higher oil price (about $60 per barrel), Azerbaijan could maintain the current exchange rate, thereby relieving the Central Bank of the need to raise it,” said the senior economist.
As for the public debt, Donets noted that despite its expansion by 2.5 percent last year, Azerbaijan remains one of the countries in the region with the lowest indicator in this matter (20 percent of GDP).
“The markets of the CIS region have every chance to benefit from the expected global economic recovery and increased demand for the assets of emerging and border markets, as well as from large-scale vaccinations. The uncertainty aroused amid coronavirus and vaccination, geopolitics and raw material prices remain, but the CIS offers interesting investment opportunities in case of different scenarios,” she added.
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