ADB renews forecasts for Azerbaijan’s economic growth

The Asian Development Bank (ADB) has announced that GDP growth is projected to edge up to 1.2 per cent in Azerbaijan in 2024 and 1.6 per cent in 2025 with higher public spending and gains in services.

According to the previous (September 2023) ADB Outlook, Azerbaijan's GDP growth for 2024 was projected at 2.6 per cent, Report informs citing the Asian Development Outlook April 2024 “Economic trends and prospects in developing Asia: Caucasus and Central Asia”.

Led by expected increases in retail trade and transportation, expansion in services is projected to rise to 2.3 per cent in 2024 and 3.0 per cent in 2025.

Gains in transport will come from an agreement between KazMunaiGas of Kazakhstan and the State Oil Company of Azerbaijan to increase the transit of Kazakh oil via Azerbaijan.

Contraction in industry is forecast to ease to 1.6 per cent in 2024 because of slowing performance at oil platforms and further to 1.0 per cent in 2025 as gas production becomes more important.

Food processing and the manufacturing of construction materials and petrochemical products will limit the decline in the broader industry sector. The next phase of agriculture support programs will help sustain growth in crop and livestock production.

In Azerbaijan, growth will be 1.2 per cent in 2024 and 1.6 per cent in 2025 as services offset declining oil output and revenue.

Private consumption and net exports will drive demand-side growth. Growth in private consumption is forecast to accelerate as economic expansion and a further slowing of inflation boost real household incomes.

Higher civil service wages will boost public consumption. Public investment will remain a driver of total investment in the forecast period, though declining oil production and weakening oil prices pose a risk to planned spending. Net exports will rise as export earnings outpace more slowly growing imports.

The Azerbaijani government forecasts GDP growth at 2.4 per cent for 2024.

The Azerbaijani economy grew by 1.1 per cent in 2023.