2015 Growth Forecast for Azerbaijan Adjusted

2015 Growth Forecast for Azerbaijan Adjusted

The European Bank for Reconstruction & Development (EBRD) has announced Regional Economic Prospects 2015. The Bank has adjusted its official growth forecast from 3.0 % to 1.5 % in 2015. The Bank has reported that Azerbaijan has “suffered” because of its dependence on hydrocarbons whose prices have fallen. At that, the ERBD is confident in the country’s sustainability to external shocks and the continued growth of the non-oil sector in the country. Meanwhile, the Government of Azerbaijan forecasts 4.4 % growth in 2015 since Center for Economic and Social Development’ s (CESD) prediction is 1.0 % mainly due to sharp decline in the crude oil price.

In the meantime, The State Statistics Committee reports that in 2014 the country produced 42.41 million tons of oil that is by 3.2% less than production for the 2013. Oil stocks as of 1 January 2015 totaled 187,600 tons. They reached their peak (270,800 tons) by 1 August. In December 3.516 million tons of oil was produced against 2.778 million tons in November, 3.599 million tons in October, 3.47 million tons in September and 3.75 million tons in August (the best index in 2014).
In 2014 production of commercial oil totaled 41.892 million tons (including 3.51 million tons in December) that was by 2.8% lower against the index of 2013.

International Monetary Fund’s (IMF0 forecasts on oil price is still under pessimism. According to IMF analysts, markets expect that oil prices will be at the level of approximately $57 per barrel in 2015 and then will increase up to $72 per barrel by 2019. “Oil prices are expected to partially recover over the medium term because of the likely decline in investment and future capacity growth in the oil sector in response to lower oil prices”, – IMF says. At the same time, the Fund noted that baseline forecasts for average gas prices remain broadly unchanged. “However, some gas exporters (Qatar) are facing lower gas prices because their contracts are indexed to oil prices”, – IMF says.

According to Fitch Ratings, yesterday it revised its base case price deck downward for crude oil to reflect continued expected market weakness near term. Both base case West Texas Intermediate (WTI) and Brent are affected. “For 2015, Fitch has revised its base case price deck to match its stress case price deck which is $50 per barrel for WTI ($55 Brent). For 2016, the base case price deck for crude has been lowered to $60 for WTI ($65 Brent). This downward revision stems from the potential for a protracted downturn in prices beyond calendar 2015. Long-term base case price deck assumptions for crude remain unchanged at $75 per barrel for WTI ($80 Brent) which Fitch believes still remains the marginal cost of full cycle production”, – the Agency says. Ultimately, Fitch expects a supply response due to capital expenditure cuts that will result in less drilling and cause prices to revert toward Fitch’s long-term base case price assumption.
© CESD, 2015

Leave A Comment