Fitch predicts growth in Azerbaijan's economy

Sat 05 August 2017 08:28 GMT | 12:28 Local Time

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Azerbaijan’s real GDP growth is forecast to rise to 4.3 percent in 2019, Fitch Ratings says.

Azernews informs with reference to the report that significant energy projects will support growth and the balance of payments in the medium term. Output from the Shah Deniz 2 project is scheduled to start in late 2018 and will double gas production when fully operational. The construction of associated major pipelines is ongoing. As a result, real GDP growth is forecast to rise to 4.3 percent in 2019.

Fitch Ratings has affirmed Azerbaijan's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) at 'BB+' with Negative Outlooks. The issue rating on Azerbaijan's senior unsecured foreign- and local-currency debt has also been affirmed at 'BB+'. The country ceiling has been affirmed at 'BB+'. The short-term foreign- and local-currency IDRs have been affirmed at 'B' and the issue rating on Azerbaijan's senior unsecured short-term local-currency bond has been affirmed at 'B'.

Azerbaijan's 'BB+' ratings balance a strong external balance sheet and low government debt, according to the report.

“Higher oil prices returned the current account to a surplus in 1Q17, the first since 3Q15. Rising prices, and greater oil and gas production in 2019, will support continued surpluses,” said Fitch.

Fitch analysts point out that the exchange rate of Azerbaijani manat has been stable in recent months.

“Exchange rate stability has allowed a moderation in inflationary pressures. Average inflation is forecast to decline, to 5 percent in 2019 from 11.8 percent in 2017,” said the report.

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