Global Economic Stability Amid Slow Growth: Azerbaijan Navigates Reform Challenges

In 2022, economists anticipated a global economic slowdown in 2023, driven by weaker external demand and tightening global financial conditions. The initial projections estimated a medium-term global growth rate between 4-5%. However, by 2023, the International Monetary Fund (IMF) reported surprising stability, albeit with a slow and uneven recovery post-pandemic and war shocks.

Head of the IMF, Kristalina Georgieva, disclosed a revised global growth forecast of 3% for both 2023 and 2024, underscoring persistent weaknesses in medium-term growth prospects. A primary factor cited for this sluggishness is continued low productivity, necessitating structural reforms to harness the potential of new technologies, particularly artificial intelligence. Despite the potential for a 2-3% annual productivity growth boost with AI, concerns over job displacement and social unrest loom large.

Georgieva emphasized the imperative for collective action on climate change, safeguarding financial stability in an interconnected world, and resolving debt issues, particularly for low-income countries, in the face of technological transformation.

Against this global backdrop, Azerbaijan's socio-economic development strategy prioritizes economic competitiveness, transitioning to an export-oriented model, fostering high-tech production, and integrating into global value chains. Notably, efforts to diversify industries and promote high-value-added sectors beyond oil gained significance.

Azerbaijan's foreign policy initiatives resulted in a remarkable threefold increase in trade turnover with Central Asian countries in the past year, supplemented by a subsequent 50% rise in the following seven months. Similar positive trends were observed in relations with oil-producing Arab nations.