WB expects fall in inflation rate in Azerbaijan

By Azernews

By Kamila Aliyeva

The World Bank expects the inflation rate in Azerbaijan to significantly decrease in the next three years.

In its updated regional report "Trade in Transition", released on May 11, the Bank expects inflation in the country at the level of 7.8 percent in 2017, in 2018 - 4.2 percent, and in 2019 - 3.8 percent.

Despite the anticipated recovery of oil prices, as oil production is not expected to increase and the non-oil sector continues to be affected by the government’s spending cuts and the banking sector distress, Azerbaijan’s economy may experience another difficult year in 2017, the report said.

However, output is expected to expand from 2018 onwards, supported by the acceleration of oil GDP as Shah Deniz gas field begins production.

The World Bank also forecasts the growth of the Azerbaijani economy at the level of 0.6 percent in 2018.

Non-oil sector growth is expected to be not so strong in 2017, as the government is set to keep tight stance on both fiscal and monetary policies to safeguard macroeconomic stability, while the banking sector slowly regains strength to support the private sector.

Meanwhile there will be a notable improvement in the consolidated fiscal position over 2017- 2019, as a result of envisioned spending consolidation.

Risks to growth and poverty reduction remain high. While recent efforts to step up social spending should help alleviate poverty, constrained private sector growth could have a negative impact on the poor.

In December 2016, the government of Azerbaijan launched a “Strategic Roadmap for the National Economy and Main Economic Sectors” which outlined the medium- and long-term goals for the development of the economy and eleven key sectors. 

The strategic road maps cover almost all sectors of the economy, including, development of the oil and gas industry, the manufacture and processing of agricultural products, the manufacture  of small and medium entrepreneurship-level consumer goods, development of heavy industry and machinery, tourism, logistics and trade, vocational education and training, financial services, communication and information technologies and utilities.