Today.Az » Business » Coface upgrades country assessment for Azerbaijan
08 February 2019 [14:15] - Today.Az


By  Trend


Coface, one of the world leaders in the field of credit insurance and risk management, has upgraded the country assessment for Azerbaijan from "C" to "B", Trend reports referring to the company.

As noted in the company's report, “Two pitfalls for businesses in 2019: the economic downturn and political risks,” higher oil and gas prices, particularly in the second half of 2018, have lead to increases in government spending without reducing the public and current accounts surpluses.

Coface experts also note a rather high amount of reserves of the State Oil Fund of Azerbaijan (SOFAZ). The sovereign wealth fund, SOFAZ - fed by oil & gas revenues - represented 90% of GDP on October 1, 2018 (figure as of October 1, 2018). The country therefore has the means to take care of its ailing banking sector.

Speaking about the country's economic prospects, analysts of the company indicate that higher economic growth is expected in the country in 2019, and the completion of Tanap gas line will enable increased exports of gas to Turkey.

“Coface is upgrading the country assessments of oil-dependent economies with oil prices remaining at a moderate level despite high volatility: Angola (now C), Azerbaijan (B), Canada (A2), the United Arab Emirates (A3), and Trinidad & Tobago (B),” the report reads.

According to Coface experts, the global business climate for 2019 will be determined by two major trends, namely a “cyclical slowdown” of the global economic growth, accompanied by “escalating political risk” and “persistent political uncertainties” between major players in the global arena. The automotive industry will suffer the most - trade wars and “increased competition”, among other reasons, are already forcing manufacturers to work with low profitability.

According to the report, the current situation in the global economy has “contrasting effects on emerging economies”.

On the one hand, the slowdown in growth in the eurozone (a +1.6 percent GDP growth is forecasted by Coface for 2019) and the United States (a +2.3 percent GDP growth forecasted) may slow down the growth of emerging markets due to a slowdown in the growth of world trade (Coface expects only +2.3 percent trade growth for 2019). On the other hand, the slowdown of the US economy reduces the likelihood of a rise in the US Federal Reserve interest rate, which means the risk of capital outflows from emerging markets is to be limited.



Copyright © Today.Az