Azerbaijan Economic Forecast

July 2, 2019

The economy appears to have lost some momentum in the second quarter of the year, on the heels of a healthy first-quarter expansion which was fueled by the oil sector. Economic activity growth moderated in April–May, largely driven by a downturn in the oil sector: Azerbaijan’s oil output contracted on an annual basis in the period due to maintenance works in April as well as the country’s commitment to OPEC+ oil cuts. This likely weighed on oil export income and dragged on government revenues, eating into gains stemming from higher global oil prices in April–May. Meanwhile, non-oil activity remained buoyant in the first two months of Q2: Healthy non-oil investment activity growth, rising agricultural production and a solid increase in industrial output, excluding the oil-sector production, signaled that other sectors remained strong in the quarter. On top of that, non-oil exports continued surging in April–May.

Azerbaijan Economic Growth

Growth should accelerate this year, thanks to increasing natural gas production and robust non-oil sector momentum. Solid private consumption growth, supported by rising wages and stable inflation, and an upturn in investment activity, aided by a more accommodative monetary policy environment and improving investor confidence, will support the domestic economy. FocusEconomics panelists see GDP expanding 2.1% in 2019, which is unchanged from last month’s forecast, and 2.3% in 2020.

Azerbaijan Economy Data

	2013	2014	2015	2016	2017
Population (million)	9.4	9.5	9.6	9.7	9.8
GDP per capita (USD)	7,870	7,926	5,525	3,901	4,149
GDP (USD bn)	73.6	75.1	53.0	37.9	40.8
Economic Growth (GDP, annual variation in %)	5.8	2.8	1.1	-3.1	0.1
Industrial Production (annual variation in %)	1.8	-0.7	2.4	-0.5	-3.4
Unemployment Rate	5.0	4.9	5.0	5.0	5.0
Fiscal Balance (% of GDP)	0.6	-0.5	-1.2	-0.4	-1.6
Public Debt (% of GDP)	12.6	14.4	35.0	50.7	53.2
Money (annual variation of M2 in %)	19.0	6.1	-50.6	34.1	0.0
Inflation Rate (CPI, annual variation in %, eop)	3.6	-0.2	7.6	15.7	7.9
Inflation Rate (CPI, annual variation in %)	2.4	1.4	4.0	12.4	12.9
Policy Interest Rate (%)	4.75	3.50	3.00	15.00	15.00
Exchange Rate (vs USD)	0.78	0.78	1.03	1.60	1.72
Exchange Rate (vs USD, aop)	0.78	0.79	1.03	1.60	1.73
Current Account (% of GDP)	16.7	13.9	-0.4	-3.6	4.1
Current Account Balance (USD bn)	12.3	10.4	-0.2	-1.4	1.7
Trade Balance (USD billion)	20.6	18.9	5.8	4.2	6.1
Exports (USD billion)	31.8	28.3	15.6	13.2	15.2
Imports (USD billion)	11.2	9.3	9.8	9.0	9.0
Exports (annual variation in %)	-2.6	-11.1	-44.8	-15.2	14.7
Imports (annual variation in %)	7.1	-16.3	4.7	-7.9	0.4
International Reserves (USD)	15.0	15.5	7.9	7.1	6.7
External Debt (% of GDP)	14.5	16.4	26.0	39.7	37.4

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Azerbaijan Facts

	Value	Change	Date
Exchange Rate	1.70	-0.66 %	Jul 11
Stock Market	0.1	0.0 %	Jul 11

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