Country Economic Forecasts > Azerbaijan

GDP fell by 3.9% on the year in January-September this year, with non-oil GDP falling by an even larger 6.1% over the same period. Sharply lower commodity prices and rising inflation have hit export revenues and private consumption. Furthermore, tighter fiscal policy saw capital spending falling 30% in January-September. Oil and gas condensate production edged down by 0.3% in this period, although natural gas production rose by 3.8%. Inflation rose to 14.3% in September, its highest since December 2008, as the weak AZN fed through into a 4% monthly surge in food prices.We now expect GDP to contract by about 3% this year, before a return to growth of 1.2% in 2017, just above official projections of 1%. Activity will benefit from further rises in oil and gas prices and from lower inflation and interest rates. But lower oil output, fiscal tightness, weak economic confidence and damaged bank balance sheets will restrain any pick-up.