IMF predicts low inflation, GDP growth in Azerbaijan

By AzerNews

The International Monetary Fund has predicted that Azerbaijan will be able to keep the inflation rate at single-digit level in 2013.

In its World Economic Outlook report released on April 16, the IMF forecasts inflation in Azerbaijan at 7 percent in 2013 and 6.5 percent in 2014.

Earlier, the Central Bank of Azerbaijan (CBA) said maintaining the inflation rate at 5 to 6 percent is the main objective of the monetary policy in Azerbaijan in 2013.

Meanwhile, the State Statistics Committee of Azerbaijan reported that the prices of consumer goods and fees on services in Azerbaijan grew by 6 percent in March 2013 compared to the previous month and the year-on-year inflation stood at 1.2 percent in the first quarter of 2013.

The IMF expects Azerbaijan's GDP to grow by 4.1 percent in 2013, by 5.8 percent in 2014 and 4 per cent in 2018.

Meanwhile, the state forecast on GDP growth rate in 2013 is at 5.3 percent, and the total volume of Azerbaijan's GDP is expected to reach $71 billion, with 55 percent of the growth to be provided by the non-oil economy.

The country recorded a 9.7 percent growth rate in the non-oil sector and its share in GDP reached 52.7 percent in 2012.

According to the statistics committee, Azerbaijan's GDP grew 3.1 percent in the first quarter of 2013 compared to the same period of 2012 and amounted to 12.947 billion manats at current prices.

The Outlook also says that the surplus of the current account of balance of payments in 2013 will amount to 10.6 percent of GDP, 6 percent in 2014, and in 2018, there will be a deficit at the level of 0.1 pecent of GDP.

The IMF also predicts the unemployment rate to remain at 6 percent in 2013 and 2014.

In March, IMF Mission Chief for Azerbaijan Raja Almarzoqi said that the IMF forecasted average annual inflation rate of 3.4 percent in Azerbaijan and the inflation rate at 7 percent in 2013.

The remarks were made in conclusion of a visit by an IMF mission to Baku from February 27 till March 12.

"The main cause of inflation in Azerbaijan will be increase of public spending on the non-oil sector. Azerbaijani state budget is expansionary, and we believe that such high public spending will affect the inflation rate," Almarzogi said.

"Through the use of oil revenue, Azerbaijan has become one of the world's fastest growing economies over the last 10 years. Supported by public spending, growth in the non-oil sector is projected to remain near 9 percent and drive overall GDP growth of 4.5 percent in 2013. With increased government spending and the non-oil economy operating at capacity, and unless actions are taken, inflation is set to reach an annual average of 3.5 percent," he said.