WB releases forecasts for Azerbaijan

  07 April 2016    Read: 1145
WB releases forecasts for Azerbaijan
The economy is projected to contract by 1.9 percent in 2016, weakened by low oil prices, tight monetary conditions, and erosion of real income due to inflation, APA-Economics reports citing to the World Bank report "ECA Economic Update: The impact of China on Europe and Central Asia".
According to the report, with a gradual recovery of oil prices, growth is likely to pick up in 2017 and reach 1.3 percent in 2018. The consolidated fiscal deficit is projected to widen significantly to 14 percent of GDP in 2016, driven by higher social spending (about 4 percent of GDP) and larger public investment, including construction of the Southern Gas Corridor pipeline (4.25 percent of GDP). The bulk of public investment will take place outside the country, so its impact on the domestic economy is likely to be limited.

The fiscal deficit is expected to narrow over 2017-18 as oil prices gradually recover and large investment ends. The current account deficit is projected to widen to 4.7 percent of GDP in 2016, with the fall in oil exports more than offsetting the impact of contracting demand. As oil prices recover, the current account is projected to return to surplus over 2017-18. While data limitations do not allow for poverty projections, poverty can be expected to rise over 2016-18 in a context of slow growth, high inflation, and limited fiscal space to provide social protection for vulnerable households.

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