Azerbaijan: Safety Nets Alert Platform (SNAP) Country Dashboard - April 2018

Originally published



Officially, the Central Bank of Azerbaijan (CBA) is seeking to establish a free-floating currency and a monetary policy focused on inflation targeting. However, since April 2017 the manat has remained fixed at about 1.7 AZN/USD, pointing to significant intervention by the CBA. Foreign exchange reserves have continuously fallen, from USD 7.1bln at the end of April 2017 to USD 6.2bln at the end of February 2018.
According to preliminary local-source data, the economy grew by 0.1% in 2017. The primary reason behind the return to economic growth (after a contraction of 3.1% in 2016) was a pick-up in oil prices in 2017, especially in the second half of the year.
On April 23rd, Parviz Shahbazov, the energy minister told news agencies that Azerbaijan would not be joining OPEC.
Although Azerbaijan has been co-operating with the OPEC countries to cut oil production, the fall in the country's oil output is not only because of the OPEC cutbacks. The oil industry in Azerbaijan has been in a state of secular longterm decline since 2013, owing to capacity constraints.
Inflation averaged 12.8% in 2017, according to data from the State Statistics Committee well above the 5-7% target of the CBA. The government expects inflation to fall within the bank's target of 6­8% in 2018. Inflation in the first quarter of 2018 was 4.1%.
Food prices have increase since mid-2016, reaching record highs in late 2017. In the last quarter however food prices have returned to normal levels. Exception is made for bovine meat and bread which are found at abnormally high prices in the markets.