Moody’s downgrades the economy of Azerbaijan to "0"

The International Agency Moody`s downgraded the Azerbaijani economy. The agency revised its June forecast, and downgraded the real GDP growth from 1% to 0% in 2017.

In 2016, the agency predicted drop in GDP to 0.7%, according to Turan.

Moody`s notes that there are risks that could lead to lower growth of the economy, given the deterioration of the situation in the financial sector, the devaluation effect on the purchasing power of the population and the growth of double-digit inflation. The deterioration of the macroeconomic forecasts of Azerbaijan is connected with the assessment of the energy markets, and the decline in expectations for oil prices. In addition, Moody `s notes the increase in the pressure on the financial system of Azerbaijan, the balance of payments, as well as the loss of confidence in the national currency and the dollarization of the banking system.

It is predicted that the external debt in relation to GDP by year's end will grow from 11.2% in 2014 to 29.6%.

Real GDP is adjusted for inflation, and is expressed in prices of the previous or any other base year (contrary to nominal GDP, which is expressed in prices of the year.) Real GDP takes into account  in what  extent the GDP growth is determined by a real increase in production rather than increase of prices.—0—