S&P names factors supporting further growth of Azerbaijan’s economy

Azerbaijan’s GDP growth will average at just around 1.5% over 2023-2025, Report informs referring to the Azerbaijani banking sector’s study by the international rating agency S&P Global Ratings.

“After solid GDP growth of 5.6% in 2021, due to fiscal stimulus and gradual easing of social isolation restrictions (which helped the recovery of the non-oil sector), as well as the gradual adaptation of economic entities to the situation, we expect economic activity will gradually pick up from 2022,” S&P noted.

“The impact of economic downturn and lower oil prices was milder than we anticipated, mostly thanks to quicker economic recovery and a wide range of government support measures for the economy that affected borrowers.

We consider the easing economic risk in Azerbaijan is of a more cyclical nature than structural, and is largely supported by favorable commodity prices and better business dynamism,” S&P noted.

Growth will likely be supported by a continuing recovery in domestic consumption aided by fiscal stimulus, higher hydrocarbon exports, and recovery of the non-oil sector.

“It is based on the assumption that there is no return to open military confrontation with Armenia. In September 2022, new fragments of conflict emerged, although the scale remains relatively contained so far. Negative repercussions of the Russia-Ukraine conflict remain limited for Azerbaijan. Russia is Azerbaijan's largest imports trading partner, accounting for 20% of total goods imports, of which wheat is the largest single item.”