By Azernews

By Ayya Lmahamad

The European Bank for Reconstruction and Development (EBRD) has forecasted a GDP growth of 4.5 percent in Azerbaijan in 2022, Azernews reports per the bank's September issue of the Regional Economic Prospects.

"GDP growth of 4.5 percent is forecast in 2022, with moderation to 2.5 percent in 2023. The risks are balanced and largely arise from the direction of energy prices and, to a smaller degree, from the likely inflation path," the report reads.

The bank noted that the strong performance of the non-energy sector led to the economic growth of 6.2 percent year-on-year in the first seven months of 2022.

The non-energy sector increased production by 9.9 percent, while hydrocarbon sectors decreased by 0.4 percent, with oil production down by 4.5 percent, though gas production increased by 15.3 percent.

"However, rising prices of hydrocarbons almost doubled export revenues and generated a large current account and a budget surplus. This created a favorable environment to sustain household real incomes, despite rising inflation, which in turn supported the strong growth of nontradable sectors of the economy," the report reads.

Moreover, the report mentioned that the inflation accelerated from 12 percent at the end of 2021 to 14.2 percent in June 2022, but slowed down to 13.7 percent in July as the first sign of abating inflationary pressures.

"The Central Bank of Azerbaijan responded firmly to rising inflation in the initial stage and raised the policy rate by 150 basis points between September 2021 and March 2022, but remained cautious afterwards. High energy prices are expected to support economic growth in the near term, but weak investment activity raises doubts about its medium-term sustainability," the report reads.

Azerbaijan is entering a new stage of development, which will cover 2022 to 2030 years. The primary tasks set up are sustainable economic growth, financial stability of the national economy, and the restoration of liberated territories.