BAKU, Azerbaijan, October 5. In 2023, it is anticipated that the external balance in Azerbaijan will maintain a surplus, primarily supported by stable energy prices, Trend reports via the World Bank.
The WB analysts note that the growth in imports for the same year is expected to be driven largely by increased public investment. Projections indicate that the fiscal balance will also remain in surplus over the medium term, averaging at 3.4 percent of GDP, according to the report.
The Bank experts believe that this surplus is sustained by continuous energy revenue, which effectively offsets the higher spending allocated for reconstruction and the implementation of the development strategy.
“The main downside risks are related to the uncertainty around the economic implications of the war in Ukraine, including the risk of reversals of money transfers from Russia. In addition, a fall in energy prices could impact economic activity, as occurred in 2016. Upside risks include the potential increase in natural gas production due to a new gas field becoming operational,” says the WB.
Regarding GDP growth, a projection of 1.5 percent is anticipated for 2023. This projection is attributed to the expected reduction in oil production and a relatively slow expansion in non-energy sector activities, as the economy converges towards pre-COVID levels, reads the latest report from the Bank.
“On the demand side, consumption will ease in 2023 while increased social transfers enabled by the revision of the budget are expected to limit the slowdown. Capital formation will largely be driven by public investment. In the medium term, in the absence of structural reforms, growth is expected to average 2.4 percent,” says the WB.
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