World Bank upbeat on growth of non-energy sector in Azerbaijan

Growth in the non-energy sector in Azerbaijan is expected to rise to 4 percent in 2024. This is primarily due to the active expansion of the construction sector.

Azernews reports that this is stated in the World Bank's April report entitled "Unlocking the power of the private sector" on European and Central Asian economies.

The report noted that public sector investment in construction affects growth. Growth rates in other areas are expected to be maintained.

In addition, the World Bank predicts economic growth in Azerbaijan at the level of 2.3 percent in 2024 and 2.4 percent in 2025 and 2026.

Azerbaijan aims to boost and sustain growth to achieve the country’s long-run objectives, as highlighted in the “Socio-Economic Development Strategy (SEDS) for 2022-26”. The SEDS targets an annual GDP growth rate of 3-4 percent over the medium-term, with close to 5 percent GDP growth targeted in the non-oil and gas sector.

The growth objectives need to contend with structural headwinds that dampen long run growth prospects. The critical headwinds are in the form of declining oil and gas reserves, declining population growth, and an ageing population. This was told by Stefanie Stallmeister, the World Bank Country Manager for Azerbaijan in an interview with Azernews.

"Azerbaijan will need a fundamentally new growth model driven by a dynamic private sector. Economic growth will need to be driven by a dynamic non-oil/gas private sector that will be more productive than the current state-owned enterprises present in several sectors of the economy and more integrated into the global economy.

Azerbaijan’s long-run growth will also be shaped by an evolving global environment. The world is more uncertain than ever. Additionally, policymakers face the challenges of falling potential growth and increased global inflation, persistent strains in global value chains, facing the changing nature of work, and the energy transition. Azerbaijan must carefully navigate these trends, being well prepared for the risks and on the lookout for emerging opportunities," she added.