Overcoming economic challenges: IMF forecast for Azerbaijan

Amid global economic uncertainty, the International Monetary Fund (IMF) has published its latest forecasts detailing Azerbaijan's economic growth prospects amid geopolitical risks and changing macroeconomic dynamics.

The IMF's April World Economic Outlook report revises global growth forecasts downward for 2024 and 2025, citing a confluence of factors including geopolitical tensions, monetary tightening and slowing growth in key economies such as China. The forecasts point to modest global growth rate of 3.2 % in both 2024 and 2025, marking a downward revision from previous estimates and pointing to a period of subdued economic growth.

Against this backdrop, Azerbaijan's economic prospects appear as a mix of challenges and opportunities: the IMF forecasts GDP growth of 2.8% in 2024, followed by more moderate growth rates of 2.3% in 2025 and 2.4% in 2029. While these figures represent an upward revision to previous forecasts, they emphasise the need for continued efforts to improve the resilience of the economy and stimulate sustainable growth.

The government of Azerbaijan shares the IMF's cautious optimism, forecasting GDP growth of 2.4 % in 2024 - a marked improvement on the previous year's figure of 1.1 %. Efforts to contain inflation are also on the agenda, as the IMF forecasts moderate inflation rates of 3.5% in 2024, 5% in 2025 and 4% in 2029. The government's commitment to curbing inflation is evident, with average annual inflation projected to fall to 5.3 % in 2024, down from 8.8 % in 2023.

One bright spot in Azerbaijan's economic outlook is its current account surplus: The IMF forecasts a surplus of 8.5 % of GDP in 2024, followed by 8.1 % in 2025 and 4.3 % in 2029. While these figures are revised downward from previous estimates, they emphasise the country's continued resilience in managing its external balances in a challenging global environment.

While the trajectory of Azerbaijan's economy may be affected by global challenges, the IMF's forecast emphasises the importance of taking proactive measures to guard against external shocks and seize opportunities.