Macroeconomic Forecast Azerbaijan

We attribute the larger contraction in January-August 2012 to lower real output growth in the non-oil industry (7.9% y-o-y in January-August 2012, compared to 10.4% for the same period of 2011). Perhaps most disconcerting is the fact that after August 2011, official State Statistical Committee growth data from September to December started to decline sharply, with real GDP growth finishing 2011 at 0.1%. For the time being, we maintain our forecast of 3.5% real GDP growth in 2012, on the basis of a significantly lower statistical base in the closing months of the year, as well as signs that gross investment in fixed capital has remained buoyant throughout the economy.

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