The World Bank Adjusted GDP Grow Forecast for Azerbaijan

The World Bank Adjusted GDP Growth Forecast for Azerbaijan

The World Bank  (WB) also adjusted its forecast for GDP Growth in Azerbaijan in 2012, The Bank’s projection decreased from 6,1 % to 3.1%  according to  WB Global Economic Prospects Report.  Last week, International Monetary Fund (IMF) adjusted its economic growth for Azerbaijan from 7.2 % to 5.7 %. IMF’s newest explanation on modification was bottom on decreasing of oil production.

According to the forecast of the Azerbaijani government, under the project of socio-economic development for 2012, the rate of the GDP’s real growth is estimated at 5.7 %, non-oil GDP – 8.6  % and oil GDP – 1.5 % while Center for Economic and Social Development (CESD) GDP Growth projection is 3.6 %.

Simultaneously, UN predicts an increase in Azerbaijan’s real GDP by 4 percent in 2012; the data indicated in the organization’s report “World Economic Situation and Prospects 2012” said. The main economic report was published on the UN website on Wednesday.

According to the information, UN predicts Belarusian real GDP growth this year at 1 percent, Moldova – 3.9 percent, Russia – 3.9 percent, Ukraine – 3.8 percent. “High economic growth rates achieved ahead of the 2008 recession have yet to return to the Commonwealth of Independent States (CIS) and Georgia,” the report said. “The aggregate growth for the CIS, is expected to decelerate to 4.0 per cent in 2012 before accelerating somewhat in 2013 as demand from developed economies eventually strengthens.”

The report says that economic activity expanded in the CIS in 2011, although growth was subdued in comparison to the faster pace observed prior to 2008. Aggregate gross domestic product (GDP) in the region rose by about 4.3 per cent in 2011, compared to 4.5 per cent in 2010, with the Russian Federation remaining the major force of economic dynamism in the CIS region. Growth will, however, weaken in the outlook due to the deterioration of the global economic situation, particularly in developed economies, and the resulting decline in commodity exports and commodity prices.

CESD stated that WB and UN new projections provide a more realistic view on Azerbaijani economy in 2012. In fact, we support our forecast as more realistic that the GDP growth will be 3, 6 %. To the extent that both IMF and Government reported GDP growth will be weaker than assumed, and that inflation will be stronger than presumed.  It will be hard achieving 5, 7 % economic growth due to deep-seated decreasing in oil production in 2012.  According to SOCAR reports, 43 million tons oil will be produced this year alongside to 46 million tons in 2011. Meanwhile oil dependency will increase next year as result of huge transfers from State Oil Fund; more than 60 % of state budget revenues will be generated through transfers from SOFAZ.  Owing to decreasing of oil production and less new value generated in non-oil sector, economic growth will highly depend on crude oil price in world market in 2012.  Therefore, there is few possibility achieving official forecast.

Reminded that World Bank forecasted 4,1 % GDP growth for Azerbaijan in 2011 last year, but GoA reported only 0,1 % economic growth.

© CESD, 2012


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