BAKU

Azerbaijan has raised its economic growth forecast for this year, backed by recovering oil prices on world markets and growth in the ex-Soviet country’s non-oil sector.

Gross domestic product (GDP) is now projected to grow 4.6 percent and amount to 82.3 billion manats ($48.4 billion), up from a previous projection of 3.4 percent, the Economy Ministry said in its Economic Development Report.

The oil and gas sector is projected to grow 3.2 percent, while the non-oil sector will expand by 5.2 percent in 2021.

In January-July, GDP grew 2.7 percent backed by growth in the non-oil sector which showed an increase of 5.3 percent. The decline in the oil sector was 3.1 percent year-on-year. In nominal terms GDP reached 47.3 billion manats in the first seven months of this year. In 2020, the economy contracted by 4.3 percent as took a serious hit from a fall in global oil prices and restrictions imposed to stop the spread of COVID-19.

In 2022, the Economy Ministry projects economic growth at 4 percent with the non-oil sector to grow by 5.1 percent and the oil sector by 1.8 percent.

A jump in the oil sector, to 4.6 percent, is expected in 2023 due to oil output from the Central East Azeri oilfield and the peak of gas production and export from the second stage of the major Shah Deniz project.

According to updated forecasts, the country’s oil sector is projected to amount to 31.9 percent of GDP (27.9 billion manats) in 2022 with declines to 30.2 percent in 2023, 29 percent in 2024 and 27.1 percent in 2025.

The Economy Ministry forecasts annual inflation at 4.9 percent in 2021, up from 2.8 percent in 2020, and higher than 3.6 percent projected for 2022.  The trend of slowing inflation rates is expected to continue in 2023-2025.

Capital investments in the economy are projected at 18.7 billion manats in 2022, 3.7 percent up from the level expected in 2021.

The government plans to keep the state debt in a range of 18 billion manats till 2026, but its size to GDP is expected to decline to 19.3 percent in 2025 from 24.4 percent in 2021.