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ADB raises country's GDP growth forecast for 2019

26 September 2019 [12:33] - TODAY.AZ

By Azernews


By Leman Mammadova

Asian Development Bank (ADB) has updated Asian Development Outlook 2019, released in April 2019.

In the updated report, the bank has raised to 2.6 percent its forecast for GDP growth in Azerbaijan for 2019.

Earlier, ADB forecasted Azerbaijan's GDP growth at 2.5 percent in 2019.

However, the Bank’s GDP growth prediction in the country for 2020 declined from 2.7 percent to 2.4 percent.

“In the first half of 2019, economic growth made up 2.4 percent against 1.3 percent . An increase of 1.8 percent was recorded in industry against the background of growth in mining (1.6 percent) and oil refining industry (13.5 percent),” reads the report.

At the same time, oil production decreased by 3 percent, and gas production increased by a record 35 percent. In the reporting period, the decline in the construction sector amounted to 11.2 percent due to a decrease in investment, while the service sector grew by 3 percent, the agricultural sector - by 13.1 percent.

ADB expects that inflation in Azerbaijan in 2019 will slow down to 3.7 percent (April forecast – 4 percent), but up to 3.8 percent in 2020 (April forecast – 5 percent).

The Bank says that the expected impact of the projected decline in world food prices largely compensates for the increase in wages and growth in demand in 2019, which leads to a decrease in the inflation forecast for 2019.

Moreover, despite the expected recovery in food prices in next year, the forecast for accelerating inflation in 2020 is also reduced, since it is expected that growth in aggregate demand will slow down.

The surplus of the balance of payments of Azerbaijan in late 2019 will be 13.9 percent of GDP (April forecast - 13.6 percent of GDP), in 2020 - 11.6 percent of GDP (April forecast - 10.8 percent of GDP), according to the bank’s forecasts.

“Despite an increase in gas production, the positive balance of foreign trade in the first half of 2019 fell to $2.4 billion from $5 billion a year earlier, due to a decrease in oil exports by 3.7 percent. Exports grew by 0.1 percent, while imports increased by 51.3 percent. We believe that higher oil prices, compared with previous forecasts, offset the decline in oil exports during the year. This leads to an improvement in the forecast for the surplus of the balance of payments for 2019-2020,” notes ADB.

The government of Azerbaijan expects GDP growth at 3.6 percent in 2019, 3.8 percent in 2020, 3.6 percent in 2021. In 2018, GDP growth in Azerbaijan was 1.4 percent, and average annual inflation - 2.3 percent.

The main objective of ADB is to support the economic development of its member countries and to help alleviate poverty and improve the living standards of the population. ADB has provided a $5.1 billion loan, guarantee, grant and technical assistance for Azerbaijan so far.

ADB’s program for Azerbaijan during 2011–2017 consisted of 47 projects. Energy was the largest sector supported, accounting for 42 percent ($2.1 billion) of total financing, followed by transport at 27 percent ($1.4 billion).

ADB plans to allocate $900 million to the country in 2019-2023 within the framework of the new five-year strategy.

The main directions of the new strategy include developing the private sector, improving the efficiency of the public sector, improving the infrastructure and strengthening the human capital. Moreover, ADB will provide support in the field of high technologies and finance innovative projects as well as will analyze opportunities of lending in national currency.

URL: http://www.today.az/news/business/186696.html

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