IMF says its World Economic Outlook projections on Azerbaijan were misinterpreted

The letter reads:

"On July 24^th several Azerbaijani news agencies published the article “IMF: economic downturn in Azerbaijan to start in 2012” prepared and published by the local news agency Fineko. The article reported the medium term projections for economic growth in Azerbaijan that were published in the April 2008 IMF World Economic Outlook (WEO). With this letter I wish to provide some clarifications on those projections.

 The negative GDP growth of 1.7 percent projected for 2012 should not be considered the "beginning of an economic recession in Azerbaijan", as claimed by the article. The projected decline in real GDP reflects the expected oil production dynamics over the medium-term. On the basis of Azerbaijan’s proven hydrocarbon reserves and the existing extraction plans, oil production is currently expected to peak in 2011 and decline gradually thereafter. Given the high share of oil extraction in Azerbaijan’s GDP, this path of oil production implies a decline in overall GDP starting in 2012. This development should also be considered in the context of the extraordinarily high GDP growth rates experienced in Azerbaijan since 2004, which have also been driven by the growth dynamics of oil production. Of course, if oil production in the future were to rebound because of the exploitation of new discoveries or enhanced production from existing fields, the IMF would revise Azerbaijan’s GDP growth projection to reflect any new development.

It is important, however, to inform the people of Azerbaijan that the IMF staff project continued positive growth of Azerbaijan non-oil GDP over the medium term, as reported in table 8 and 10 of the recently published Staff Report for the 2008 Article IV Consultation with the Republic of Azerbaijan (http://www.imf.org/external/pubs/cat/longres.cfm?sk=22135.0) Progress with structural reforms, the improvement of the business climate, and the ongoing modernization and expansion of infrastructure are expected to promote growth in the non-oil economy. Non-oil activities need to become the engine of growth in Azerbaijan while oil production subsides. After all, what matters most to the people of Azerbaijan are the creation of stable jobs and the possibility of continuous improvements in their standard of living. The achievement of these goals will mostly depend on the creation of a dynamic and prosperous non-oil economy.

 Finally, it is gratifying to see that the information and documents related to the economy of Azerbaijan available on the IMF web site are widely used by journalists to inform the public on economic issues. However, sometimes, the information included in these documents does require some topical knowledge and technical skills to interpret the data and charts included in these documents. Journalists and researchers in Azerbaijan that are interested in clarifications regarding data and information reported in IMF documents should not hesitate to contact the IMF resident representative office in Baku for help. A constructive dialogue will help ensure that the press uses the information available on our web-site properly and that the readers are thus provided with correct information. Our office closely follows media reports on the Azerbaijan economy that refers to IMF sources and, when needed, we will request the media to correct inaccuracies or, in cases of misinterpretations, we will gladly provide clarifications as necessary, similar to this one".

/Today.Az/