BAKU, Azerbaijan, May 28. The reserves of
Azerbaijan's State Oil Fund (SOFAZ) will continue to grow, assuming
hydrocarbon prices remain elevated, Trend reports citing the
International Monetary Fund (IMF).
The Fund says in its latest report that Azerbaijan's economic
growth is projected to pick up marginally and inflation to remain
within the Central Bank's target band.
"Staff expect GDP to pick up moderately to 2.1 percent in 2026,
amid continued weakness in oil and gas production. Nonoil GDP
growth is projected to accelerate to 3.7 percent, before
stabilizing at 3½ percent in the medium term. The rebound reflects
a slower pace of fiscal tightening expected in 2026 and positive
indirect effects of higher oil and gas prices due to the war in the
Middle East," reads the report.
IMF analysts note that the output gap in the nonoil sector is
expected to fall but remain positive in 2026, before gradually
closing over the medium term.
"The outlook for oil GDP, which is driven by binding production
constraints, is projected to decline by 2.0 percent in 2026 before
slowing at a moderate pace of 0.5 percent, pushing down overall GDP
growth to about 2½ percent in the medium term. Inflation is
projected to pick up to 6.0 percent by end-2026, assuming higher
imported food inflation amid the war in the Middle East, which
could also erode real incomes and reduce demand. Nonetheless, the
current account surplus is expected to improve significantly in
2026, owing to the increase in hydrocarbon prices, before weakening
gradually over the medium term," the report says.
