BAKU, Azerbaijan, July 2
By Zeyni Jafarov - Trend:
Rising demand for and price of oil, supported by an expected gradual increase of oil quotas in the coming months, will strengthen Azerbaijan’s overall economic performance in the second half of 2021, the June release of Regional Economic Prospects report of the European Bank for Reconstruction and Development (EBRD) said, Trend reports.
According to the bank experts, the gradual recovery of Azerbaijan’s economy is being driven by sectors other than oil and gas.
After the COVID-19 pandemic and a slump in oil prices, Azerbaijan’s GDP declined by 4.3 percent in 2020. A strong contraction in the oil and gas sector of 7.2 percent was balanced by a softer decline in the rest of the economy, which was helped by the government’s extensive support package, the EBRD’s report said.
The document noted that lower oil revenues on the back of the price slump and the production decline under the OPEC+ deal turned external and fiscal surpluses to the deficit.
“However, Azerbaijan’s public debt remained low despite the ensuing gaps as funding needs were met domestically by drawing upon the large assets of the State Oil Fund of Azerbaijan (SOFAZ),” the report added.
Besides, according to EBRD, although non-hydrocarbon sectors started to recover in 2021, posting 4.5 percent year-on-year growth in the first five months, the overall GDP growth, estimated at 0.8 percent year-on-year in the same period, continues to be weighed down by lower oil and gas production.
In general, as the EBRD forecasted, Azerbaijan’s economy will grow by 2 percent in 2021 and 2.5 percent in 2022.
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