BAKU

Azerbaijan’s economic recovery continued to gather pace as the country eased the majority of the restrictions it had imposed last year to curb the coronavirus pandemic, allowing the non-oil sector to expand, and backed by rising global oil prices.

Gross domestic product (GDP) grew 4.9 percent in January-October this year from a year earlier mainly backed by the growth in the non-oil sector. In January-September, the economy grew 4.8 percent.

“GDP growth may exceed 5 percent this year,” Samir Sharifov, the country’s finance minister, told the parliament.

“The economy of Azerbaijan is recovering at a rapid pace and will reach pre-pandemic indicators,” Sharifov said.

The rise in the oil sector was 2.6 percent, while the non-oil sector grew by 5.9 percent. In nominal terms GDP reached 71.6 billion manats ($42.1 billion).

Oil and gas condensate production declined 0.9 percent from January to September from a year earlier to 25.9 million tonnes, while natural gas output increased 15.1 percent to 31.7 billion cubic metres (bcm) in the same period.

In September, Azerbaijan has raised its economic growth forecast for this year – 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 oil and gas sector is projected to grow 3.2 percent, while the non-oil sector will expand by 5.2 percent in 2021.

The World Bank said Azerbaijan’s economic growth should be supported by the stabilisation of oil prices as well as investment and reconstruction spending.

The November 2020 ceasefire agreement between Armenia and Azerbaijan alleviated geopolitical tensions in the region, although risks to stability remain elevated.

Still, economists’ predictions as to the pace of the recovery vary. While the World Bank predicts that Azerbaijan’s economy will grow 5.0 percent this year and 3.1 percent in 2022, the International Monetary Fund’s updated projection is less upbeat, forecasting 3.0 percent growth in 2021 and slowing to 2.3 percent in 2022.

Meanwhile, the Asian Development Bank said in June that growth was forecast to return in 2021 at 1.9 percent and accelerate to 2.5 percent in 2022 as demand improves at home and abroad. As consumer confidence is restored and petroleum receipts become available for public investment, growth in the petroleum industry is expected to be outpaced by expansion in the rest of the economy, it said.