Azerbaijani economy will grow by 5% this year: World Bank

The GDP growth rate is projected to rise to 5.0 percent in 2021, reflecting a strong recovery in both the energy and nonenergy sectors

The GDP growth rate is projected to rise to 5.0 percent in 2021, reflecting a strong recovery in both the energy and nonenergy sectors, Qazet.az reports citing World Bank.

This forecast assumes that the pandemic will remain controlled, and vaccination will continue at its current pace. Nonoil/gas GDP growth is projected to reach 7.1 percent in 2021, due to a low base effect, rebounding servicesector activity and robust growth in agriculture and nonenergy manufacturing.

Output is expected to reach prepandemic levels by end-2021. The annual GDP growth rate is projected to moderate to an average of 2.9 percent during 2022-23. The nonenergy sectors are expected to drive growth, supported by rising public investment, including post-conflict reconstruction. Energy-sector growth is projected to stabilize in line with predetermined OPEC+ quotas and anticipated expansion of natural gas production by end2023, which will also increase energyrelated greenhouse gas emissions and slow overall decline in emissions.

Following a marked rebound in 2021, consumption growth is expected to slow over the medium term amid declining fiscal spending. Investment is forecast to remain subdued amid lingering COVID19 related uncertainty and persistent structural weaknesses. Rapid increase in prices for imported food and nonfood items and recovering domestic demand is projected to boost inflation to 5.5 percent in 2021, close to the upper bound of the CBA target range. External inflationary pressures are expected to remain elevated in 2022 and moderate thereafter. A significant external-account surplus is projected to persist through 2023, supported by elevated hydrocarbon prices and rising natural gas exports. Imports are estimated to increase gradually as demand recovers.

The fiscal balance is forecast to remain in surplus until end-2021 and to average 4.6 percent of GDP over the medium term, supported by favorable energy prices, increased revenue collection due to resurgent economic activity, and stable spending anchored by a new fiscal rule targeting the nonoil/gas primary balance that is expected to take effect in 2022.