EBRD forecasts GDP growth in Azerbaijan

By Azernews

By Abdul Kerimkhanov

The European Bank for Reconstruction and Development (EBRD) has announced its forecast for Azerbaijan’s real GDP growth in 2019.

EBRD expects an increase of Azerbaijan’s GDP by 3.5 percent in 2019, according to the Bank’s report.

The report says that the country's GDP in 2020 will grow by 3.3 percent.

GDP in January-February 2019 increased by three percent compared to the same period of 2018, according to analysts’ estimate.

Azerbaijan's economy began to recover in 2018 after a decline in the previous two years, says the message.

"GDP increased by 1.4 percent in 2018, helped by rising oil prices and rising gas production and exports," the report says.

The Bank also noted that the non-oil sector showed an increase of 1.9 percent.

EBRD experts noted that the volume of services in the areas of transport, real estate, non-oil industry, trade, agriculture and information and communication services increased.

Dollarization of loans and deposits is declining, but remains high at 37.1 percent and 65 percent, respectively, as of February 2019, according to EBRD.

"The current account surplus widened from 4.1 percent of GDP in 2017 to 12.9 percent in 2018, as receipts from the oil and gas sectors increased by 37.3 percent. The consolidated budget moved from a deficit of 1.5 percent of GDP in 2017 to a 5.9 percent surplus in 2018," reads the message.

The report notes that, against the background of a stable exchange rate supported by rising oil prices, inflation declined on average from 12.9 percent in 2017 to 2.3 percent in 2018.

Established in 1991, EBRD invests in projects that contribute to the transition to an open market economy, as well as the development of private and business activities. The Bank was established to support countries of the former Eastern Bloc in the process of establishing their private sectors. To that end, it offers “project financing” for banks, industries and businesses, for new ventures or existing companies.

EBRD invests in debt capital-market instruments as well as in equity. These transactions promote higher standards of corporate governance while also fostering capital market development and promoting alternative sources of financing. The EBRD also issues its own local-currency-denominated bonds, or bonds linked to local currency, on the international and domestic markets for its funding purposes.

The Bank is a leading investor in Azerbaijan. The country has been cooperating with EBRD since 1992 to achieve further economic development. One of the main priorities of EBRD in Azerbaijan is to support the local corporate sector with direct financing. EBRD continues to pursue investments in energy projects, especially where there is a gap to improve efficiency and energy security.

Presently, EBRD pays special attention to the development and financing of renewable energy projects in Azerbaijan. The Bank is also interested in the development of SMEs and financial sector in the country while helping the economy to diversify further.