The European Bank for Reconstruction and Development (EBRD) expects the growth rate of the Azerbaijani economy in 2023 at the level of 2.5%, in 2024 at 2.7%, according to the latest EBRD’s Regional Economic Prospects forecast, Report informs.
These figures remained unchanged and are in line with the February forecast.
Output in the EBRD regions is expected to grow by 2.2 percent in 2023, a 0.1 percentage point downward revision relative to the forecasts published in February.
Growth is expected to pick up to 3.4 percent in 2024 (0.1 percentage point up relative to the February forecast) as inflationary pressures gradually subside.
Growth has been revised down in Türkiye reflecting the economic effects of the February 2023 earthquakes as well as the expected tightening of credit conditions later in the year, in the southern and eastern Mediterranean where reforms have been delayed and in central Europe and the Baltic states.
Growth in the EBRD regions slowed to 3.3 percent in 2022 from 7.2 percent in 2021, as the war on Ukraine took its toll.
“Against this background, the EBRD regions experienced two consecutive quarters of negative quarter-on-quarter growth in the second half of 2022 (the definition of a technical recession). It was the fourth such occurrence since the mid-1990s (following the Asian and Russian economic crises of 1997-98, the global financial crisis of 2008-09 and the Covid-19 crisis).
A caveat is in order: these calculations are based on early estimates of quarterly GDP in constant prices and the data underpinning these calculations is subject to major revisions.”
The EBRD also expects growth to slow in Eastern Europe and the Caucasus (excluding Ukraine) as the extraordinary factors that boosted economic activity in 2022 provide limited additional stimulus. The region as a whole is projected to grow by 1.9% in 2023 and 3.3% in 2024.
In 2022, the volume of GDP in Azerbaijan grew by 4.6%, while in the non-oil sector the growth was 9%, as the economy benefited from a significant inflow of foreign currency, the bank said.
“Strong economic growth in the past two years was driven by a post-Covid-19 rebound and high hydrocarbon revenues. High prices of oil and gas boosted export revenues, while at the same time net money transfers increased six-fold, mostly linked to Russian citizens including many of Azerbaijan origin. During the first three months in 2023, economic growth sharply decelerated, to 0.4 percent year-on-year, with output in the oil and gas sector falling by 4.0 percent, even though gas production has benefitted from rising European demand for alternative gas supplies,” reads the report.
