UNESCAP
A regional UN commission predicts Azerbaijan will be among the fastest growing economies in 2010 with 7% growth and a 6% increase in inflation.
The growth will be fueled mainly by high oil and gas prices and increased external demand, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) said in its Economic and Social Survey of Asia and the Pacific 2010, published on 6 May in Bangkok.
The performance of the non-oil sector is expected to lag behind the oil sector, the UNESCAP survey said.
Annual consumer price inflation could reach 6% in 2010 due to higher energy and commodity prices, increased capital inflows and expected rise in domestic demand, the survey continued.
Foreign capital inflows are expected to increase in 2010 owing to the resumption of global growth, while the current account surplus is expected to rise on the back of increased oil exports.
Looking back at 2009, the survey noted that GDP in Azerbaijan grew 9.3%, buoyed by strong domestic demand. Retail trade grew 8.9% last year. The industrial sector, which expanded 8.6% in 2009, was one of the main contributors to economic growth in the country. Agricultural production grew 3.5% in 2009, owing to a good wheat harvest which was expected to cover domestic demand in 2009.
In 2008, inflation was 20.8%, the highest rate for a decade, but in 2009 it was expected to decline to 1.5%, the survey said.
Azerbaijan's current account surplus was expected to reduce from 35.5% of GDP recorded in 2008 to 16% of GDP in 2009, owing mainly to the steep fall in international oil prices and a contraction in external demand. Exports and imports declined by 69.2% and 14.6% respectively in 2009. As a result, the trade surplus narrowed from more than US$40 billion in 2008 to US$8.6 billion in 2009. Hydrocarbon exports accounted for more than 80% of the total export earnings.
The Azerbaijani government had the advantage last year of higher taxes coming from corporations following rising oil prices. Nevertheless because of increased social spending and large infrastructure projects, the budget deficit rose from 6.1% of GDP in 2008 to 8.2% of GDP in 2009. The government continued to increase expenditure to meet government pledges on social spending and to maintain financial support for large infrastructure projects.
Monetary policy played a more limited role during the financial crisis, the UNESCAP survey said. There were two key policy targets - curbing rising inflation and providing exchange rate stability. As a result of the global financial crisis, the national currency of Azerbaijan experienced downward pressures.
Weak institutional capacity, low capitalization and lack of coordination between fiscal and monetary policy continued to be the main constraints to the effectiveness of monetary policy in Azerbaijan in 2009.
Established in 1947 with its headquarters in Bangkok, UNESCAP seeks to overcome some of the Asia-Pacific region’s greatest challenges.
News.Az
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