According to the updated expectations of the international rating agency Fitch Ratings, this year the Azerbaijani economy will grow by 2.7% in real terms, Fitch told APA-Economics.
Direct trade links, combined with tourism and remittance flows from Russia, are a key transmission channel for the other Fitch-rated CIS+ sovereigns (Armenia, Azerbaijan, Georgia, Kazakhstan, Turkmenistan, and Uzbekistan). Fitch still expect all these economies to grow in 2022, but have cut our forecasts by 0.2pp – 4pp, with the largest cuts for commodity importers.
The effects of weaker growth and higher inflation are balanced against a likely large increase in hydrocarbon exports receipts in the region’s main exporters. This is most apparent in Azerbaijan, which exports gas to Europe and will benefit from strong demand and higher prices. Fitch forecasts a 2022 general government budget surplus of close to 10% of GDP.
Official sector funding will keep reserves above pre-Covid-19 pandemic levels in Armenia and Georgia despite a terms-of-trade shock aggravated by lower remittances, and for Georgia, where the 2022 current account deficit will be above 10% of GDP, by likely lower tourist arrivals. Energy exporters will see current account surpluses (27.3% of GDP in the case of Azerbaijan) enabling a further strengthening of sovereign asset buffers.
Source: Azeri-Press News Agency