ADB updates growth forecasts of Azerbaijan's economy for 2024-2025

The Asian Development Bank (ADB) predicts that the GDP growth rates in Azerbaijan will be 1.2% in 2024 and 1.6% in 2025 due to the increase in public spending and the service sector, Azernews reports.

This is stated in the bank's April report of "Development Prospects of Asia" (ADO) published today.

It should be recalled that according to the previous (September 2023) ADB assessment, Azerbaijan's GDP growth for 2024 was predicted at the level of 2.6%.

"Growth in the service sector is projected to increase to 2.3% in 2024 and 3% in 2025, due to the expected growth in the retail trade and transport sector. Profits in the transport sector will be provided on the basis of the agreement between the State Oil Company of Azerbaijan (SOCAR) and Kazakhstan's national company "KazMunayGaz" on increasing the transit of Kazakh oil through the territory of Azerbaijan," ADB noted.

According to the bank's analysts, the decline in the industrial sector will decrease to 1.6% in 2024 due to the weakening of oil platform productivity, and to 1% in 2025 due to the more important gas production.

"The production of food, building materials and petrochemicals will limit the downturn in the broader industrial sector. The next round of agricultural support programs will help support growth in crop and livestock production," the report said.

ADB believes that private consumption and net exports will stimulate demand growth. Private consumption growth is projected to accelerate as economic growth and a further slowdown in inflation will increase real household incomes. High salaries of civil servants will stimulate public consumption.

According to bank analysts, public investment will remain the main driver of total investment over the forecast period, while lower oil production and weaker oil prices pose risks to planned spending. Net exports will also increase as export earnings outpace slowly rising imports.

It should be noted that the government of Azerbaijan predicts GDP growth for 2024 at the level of 2.4%.

In 2023, the economy of Azerbaijan grew by 1.1%.