Inflation: A Persistent Problem

BMI View: The Azeri government is keen to spend some of the vast amount of oil (and soon gas) revenues on socio-economic development and security enhancement. While this is understandable, the side effect is likely to be persistently high inflation, which poses a risk to both economic stability and the development of the non-oil sector. These short-term considerations aside, vast increases in energy production, and investment in economic diversification, should provide a solid platform for sustainable growth in the long-term.

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