BAKU, Azerbaijan, October 26. BMI, a subsidiary of Fitch Solutions, is optimistic about the economic outlook for Azerbaijan in 2024.
The company maintains a forecast of 3.1 percent growth, which is above the consensus, indicating an improvement in the country's economic prospects.
BMI's Oil and Gas team anticipates that the average annual oil prices will increase from USD 80 per barrel in 2023 to USD 83 per barrel in 2024. This rise in oil prices is attributed to the persistent structural supply deficit in the market. Additionally, BMI expects crude oil output to return to positive growth, with a projected increase of 3.4 percent year-on-year. The combination of higher oil prices and increased production is expected to contribute to stronger economic growth in 2024. Simultaneously, a decrease in inflation and lower interest rates is poised to create a favorable environment for households and investors.
Looking ahead to 2024, BMI predicts that inflation will average 7.5 percent for the year, reaching 6.2 percent by the end of 2024. The company also foresees the Central Bank of Azerbaijan maintaining its interest rate at 9 percent throughout the remainder of 2023, with a planned reduction to 8.25 percent by the end of 2024.
For the current year, BMI's experts acknowledge that the non-oil sector has faced challenges due to elevated inflation and borrowing costs. However, they foresee an improvement in conditions during the second half of 2023. Monthly GDP data for 2023 has shown weaker performance compared to 2022, with an average year-on-year growth rate of just 0.3 percent over the first eight months, in contrast to 5.8 percent in the same period in 2022. High inflation and interest rates are identified as the main obstacles in the non-oil sector, limiting consumer spending and investment. In 2023, inflation has averaged 13.1 percent year-on-year, well above the Central Bank's target range of 2-6 percent. Nonetheless, month-on-month data indicates a consistent decline in inflation since May 2023, suggesting an improvement in the cost-of-living situation. BMI's forecast for 2023 is an average inflation rate of 11.5 percent year-on-year, with an expected year-end rate of 8.7 percent.
Azerbaijan's GDP from January through September 2023 showed a notable growth, increasing by 0.8 percent compared to the same period in 2022, reaching a total of 90.812 billion manat.
During the same reporting period in 2023, the non-oil sector witnessed a substantial increase in value added, with a growth of 3 percent, while the oil and gas sector experienced a 1.5 percent decrease in comparison to the figures from 2022.
From January through September 2023, the GDP per capita in Azerbaijan stood at 8,949 manat.
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