According to the report, Azerbaijan is on course to expand its economy this year. The IFI projects the country's GDP to grow by 2.8 percent this year, and by 2.9 percent next year.
Structural economic reforms in the country are ongoing, and the non-oil sector is playing an ever-increasing role, the organization’s report reads.
The sharp depreciation of the currencies and the move toward more flexible exchange rates, particularly in Azerbaijan and Kazakhstan, have helped authorities manage external pressures, primarily related to the price situation in the oil markets. This increased competitiveness and helped reduce the impact of external shocks. The exchange rate against the US dollar was generally stable in 2018 and during the first 7 months of 2019, which helped to contain inflationary pressures.
According to IIF analysts, growth in Azerbaijan is driven by the opening of the Southern Gas Corridor (SGC) and continued improvement in the services sector. The SGC should enable increased hydrocarbon production, particularly natural gas. A key element of the SGC is the Trans Adriatic Pipeline, which will allow to transfer 10 billion cubic meters per year of natural gas from the offshore Shah Deniz field to Europe starting in 2020.
Both the fiscal and current account balances are in surplus, and favorable movements in global oil prices have contributed to the growth of gold and foreign exchange reserves. Cargo transportation increased by 1.5 percent in 2019 compared to a year earlier.
Azerbaijan’s state oil company SOCAR has produced oil and gas at the same level as in 2018; crude oil exports have increased modestly in volume terms, but natural gas, refined oil and petrochemicals have climbed substantially. At the same time, the country has become a net exporter of electricity to Eastern Europe.
Structural reforms are ongoing. Azerbaijan has risen to the 25th place in the Doing Business rankings, the highest in the CIS. The country is in the top 50 for most indicators. The challenge in the following period is fostering diversification, inclusion, and empowerment of the private sector.
