OCT. 21 (The Conway Bulletin) — Azerbaijan said that its economy would shrink in 2016 by 2.8%, a major reversal from its earlier insistence that it would avoid a recession and post growth of 1.8%.
Answering questions posted by Reuters, the Azerbaijani economy ministry blamed sluggish oil prices and low global growth for the GDP revision. Last week government data showed Azerbaijan’s GDP had contracted by nearly 4% in the first nine months of 2016.
“The growth at 1.8 percent was projected in 2015, when the International Monetary Fund had been projecting the oil price at $64/barrel,” Reuters quoted government officials as saying. Oil prices are now around $50/barrel, double the price in January.
Most economists have been predicting a recession in Azerbaijan this year and the reluctance to downgrade its own growth estimate has been seen by many as fanciful thinking that will damage the credibility of the Azerbaijani government.
According to the World Bank the last time that Azerbaijan’s GDP contracted was in 1995.
>>This story was first published in issue 302 of The Conway Bulletin