Azerbaijan Country Risk Report Q4 2019
The outlook for the Azerbaijani economy will improve gradually in the coming quarters, against the backdrop of rising energy prices and a brighter outlook for household consumption.
At Fitch Solutions, we forecast real GDP growth in Azerbaijan to come in at 2.5% in 2019 and 2.9% the following year, above Focus Economics' estimates of 2.1% and 2.4% growth for both years.
That said, the country's improving business environment is unlikely to compensate for key structural impediments to growth, namely its lackluster attempts to diversify its economy away from the energy sector.
Baku's hosting of the UEFA Europa League final has once again increased international media scrutiny on Azerbaijan's human-rights record, as well as the coun-try's ongoing border dispute with neighbouring Armenia, potentially discouraging investment and tourism.
Azerbaijan's ability to continue financing new infrastructure projects and prestige events looks set to wane, amidst a challenging economic and fiscal outlook for the country.
A major downside risk stems from another oil price crash, resulting in deteriorating public finances and further cuts in capital expenditure. This would halt Azerbaijan's economic recovery and likely cause another recession.
The banking sector remains weak, and continued weakness could weigh significantly on credit growth and economic activity.
Learn how to effectively navigate the market research process to help guide your organization on the journey to success.Download eBook