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IMF: The negative GDP growth of 1.7 percent projected for 2012 should not be considered the â€œbeginning of an economic recession in Azerbaijanâ€

29 July 2008 15:20 (UTC +04:00)

IMF Resident Representative Office in Azerbaijan told APA-Economics Koba Gvenetadze considers that the negative GDP growth of 1.7 percent projected for 2012 should not be considered the â€œbeginning of an economic recession in Azerbaijanâ€, as claimed by the articles in various media outlets.
â€œThe projected decline in real GDP reflects the expected oil production dynamics over the medium-term. On the basis of Azerbaijanâ€™s proven hydrocarbon reserves and the existing extraction plans, oil production is currently expected to peak in 2011 and decline gradually thereafter. Given the high share of oil extraction in Azerbaijanâ€™s GDP, this path of oil production implies a decline in overall GDP starting in 2012. This development should also be considered in the context of the extraordinarily high GDP growth rates experienced in Azerbaijan since 2004, which have also been driven by the growth dynamics of oil production. Of course, if oil production in the future were to rebound because of the exploitation of new discoveries or enhanced production from existing fields, the IMF would revise Azerbaijanâ€™s GDP growth projection to reflect any new developmentâ€ he said.
â€œIt is important, however, to inform the people of Azerbaijan that the IMF staff project continued positive growth of Azerbaijan non-oil GDP over the medium term, as reported in table 8 and 10 of the recently published Staff Report for the 2008 Article IV Consultation with the Republic of Azerbaijan. Progress with structural reforms, the improvement of the business climate, and the ongoing modernization and expansion of infrastructure are expected to promote growth in the non-oil economy. Non-oil activities need to become the engine of growth in Azerbaijan while oil production subsides. After all, what matters most to the people of Azerbaijan are the creation of stable jobs and the possibility of continuous improvements in their standard of living. The achievement of these goals will mostly depend on the creation of a dynamic and prosperous non-oil economy,â€ Koba Gvenetadze said.