Açıq mənbələrdən foto

Açıq mənbələrdən foto

The Executive Director of the International Monetary Fund (IMF), Kristalina Georgieva, announced the beginning of the global crisis in a statement to the press after the meeting with the Board of Directors of the IMF and the Finance Committee. She said that they have envisioned growth prospects for 2020 and 2021, it is clear that the global economy has now entered a recession that could be as bad or worse than the 2009 downturn. She noted that the exit from the recession in 2021 will depend on when the virus will be eradicated worldwide. The main concern of the members of the Board of Directors, who decided to double the IMF's emergency fund to combat COVID-19, is the impact of the solvency problem caused by the sudden cessation of the world economy on liquidity. The wave of bankruptcy created by it can not only slow down the process of economic recovery but also destroy the structure of society. The IMF director said that the financial needs of markets, which are currently emerging, estimated at $ 2.5 trillion. According to her, the cessation of tourism and exports of goods, which are the main inflow of foreign currency, creates shocks in global demand. She also said that the countries that export raw materials will be seriously affected by price shocks. Kristalina Georgieva believes that the sustainability and depth of the recession in the world economy will depend on two factors: the eradication of the virus and the effective coordination of the response to the crisis.[1]

In addition, Moody's Investment Service released a report on the effects of the COVID-19 pandemic, which updated its 2020 forecast for the G20 economy.[2] The agency forecasts a total decline of 0.5 percent this year in these countries, which account for 45 percent of the world economy. According to Moody's Investment Service's very conservative and optimistic scenario, there will be a decline in GDP production in the 13 countries of G20 - Argentina (-3.9%), Mexico (-3.7%), Germany (-3.0%), Italy (-2.7%), UK (-2.6%), South African Republic (-2.5%), Japan (-2.4%), Canada (-2.2%), USA (-2%), Brazil (-1.6%), France (-1.4%), Turkey (-1.4%), a growth in 6 countries - Indonesia (+ 3.7%), China (+ 3.3%), India (+2.5), Saudi Arabia (+1.5), Russia (+0.5), South Korea (+0.1), neither a growth nor a decline in 1 country – Australia.

The US international credit agency Standard&Poor's (S&P)[3] has maintained Azerbaijan's sovereign rating at BB+. This level includes the availability of alternative resources to manage international credit agencies in Azerbaijan, which does not have the status of an investment rating country, against the background of increasing credit risks. One of the highlights of the S&P report is that long-term low oil prices on the world market will lead to changes in the exchange rate of the manat against the dollar. S&P believes that the Azerbaijani government, unlike in 2015, can now take such a step to avoid losing foreign exchange reserves. As for other factors that led to this step, according to the S&P evaluation, the expected deficit in the current account of the balance of payments is projected at 7.5% of GDP this year. However, according to the forecasts of the Ministry of Economy, a surplus of $ 2.5 billion, or 5.2 percent of GDP, was expected in the balance of current operations for 2020.[4]

The threat to economic growth in Azerbaijan is not only due to the restrictions imposed by COVID-19 but also due to the price shock in the world commodity market. On the one hand, COVID, which has shut down the tourism, lodging, entertainment, and education industries almost 100 percent, on the other hand, has sharply reduced purchasing power in the trade, services, and catering sectors. At the same time, due to the fall in oil prices on the world market, the expected reduction in foreign exchange earnings from export revenues by 5 times, as well as restrictions on international trade in non-oil products have a negative impact not only on GDP growth but also on financial flows. Thus, in 2020, 34.5 percent of GDP was expected to be formed in the oil sector, and 65.5 percent in the non-oil sector.

Furthermore, the closure of small businesses (travel agencies, restaurants, event organization agencies, passenger service, retail, and service facilities) has led to a worsening of indicators of unemployment and poverty. Undoubtedly, the vast majority of those working at these facilities will lose their jobs and be added to the list of the poor.

During this period, the use of public resources to combat COVID-19 has led to an increase in fiscal spending. Since it is doubtful that ₼ 1 billion allocated from the state budget for this purpose will play a sufficient role in providing financial support in solving the large-scale problems facing the economy, additional costs will pose risks to fiscal sustainability.

All this leads to the conclusion that the 3% growth forecast[5] for the Azerbaijani economy by the Ministry of Economy in 2020 will be reduced to the level of recession. Because the Ministry of Economy forecast the highest growth in the accommodation of tourists and public catering (6%), after information and communication, in the development of the economy by sectors this year. This sector has to stop operating, especially in quarantine conditions.

The lack of development of online services and trade in Azerbaijan further narrows the way out of the current situation. Limited use of non-cash transactions in payment systems, weak digital economic system and infrastructure, and low level of e-governance have significantly narrowed the way out of the problem due to the dependence of the national economy on price shocks in the commodity market accompanied by the shadow economy and corruption. Adding the problems caused by the global crisis to all this requires the government to make quick and correct decisions.

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