The World Bank has
updated
its Country Snapshot report on Azerbaijan.
The World Bank (WB) expects a slowdown in the average annual inflation in Azerbaijan to 5% in 2017, according to the updated report of the Azerbaijan Partnership Program Snapshot.
At the end of 2016, the average annual inflation in Azerbaijan was 12.6%.
According to the report, the Azerbaijani economy in 2017 is likely to face another year of recession, despite the expected recovery in oil prices.
In the forecast part of the report, the bank said that the Azerbaijani economy is likely to experience another year of negative growth in 2017, despite the expected recovery in oil prices, since oil production is not expected to grow and the non-oil sector is still affected by reduced government-spending and the state of the banking sector.
Nevertheless, according to forecasts, production will expand from 2018, which is facilitated by the acceleration of oil GDP, since the Shah Deniz-2 gas field will begin production.
The growth of the non-oil sector will remain weak, as the government intends to stick to a tough stance on both fiscal and monetary policies to ensure macroeconomic stability, and the banking sector is gradually restoring its strength to support the private sector.
“Current conditions do not contribute to a significant reduction in poverty. While recent efforts to increase social spending should contribute to poverty reduction, limited private sector growth may negatively impact the poor. High risks remain for growth and poverty reduction. The immediate task for the government is to minimize the impact of planned fiscal consolidation on growth and to ensure spending to protect the poor”, the Bank said.
Another challenge is to restore the confidence of the public and investors, which requires bold reforms to accelerate the decision-making process of the banking sector and improve the business environment, as well as transparency and efficiency of the government in the dissemination of such policies.
