"The economy has stabilized in 2017 thanks to active macroeconomic policies and stronger oil prices. The nonhydrocarbon economy started to expand mainly due to reviving service and agriculture sectors. Higher oil prices, better nonhydrocarbon exports, and import compression have also restored the current account surplus. Annual headline inflation, however, has remained elevated mainly due to the impact of exchange rate pass-through effects and one-off increases in administrative prices. For 2017, the mission now projects real GDP to contract by 0.3 percent, and inflation to average 13 percent.”
"Growth prospects are positive in the near term. With expanding public investment and social spending, the nonhydrocarbon sector is expected to increase by 4 percent in 2018. The hydrocarbon sector, on the other hand, will continue to contract. Overall, growth is projected at 2 percent in 2018 , and should range between 3.5 to 4 percent in the medium term as new natural gas fields come online. As base year effects wear off, inflation should decline to 7 percent in 2018, and gradually recede. Although the restructuring of the banking sector is not complete, risks to the outlook are broadly neutral.”
"Fiscal spending—particularly capital spending—is set to increase markedly in 2018. While higher oil prices should help to contain the negative impact on Azerbaijan’s fiscal balances, there is a concern about the quality of public investment, and the economy’s capacity to absorb a large jump in capital spending. The government is planning to address this concern, in part, by implementing a set of fiscal rules, starting in 2019, to guide fiscal policy over the medium term. These rules would be a step in the right direction and, if well designed, improve credibility and predictability of policymaking.
"The team would like to thank the authorities for their openness, candid discussions and their hospitality”

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