"We also note that the outlook for investment into Azerbaijan has improved considerably and we forecast that the component’s real growth contribution will increase to 1.3 percentage points (pp) in 2023 from an estimated 0.9pp in 2022 (0.8pp averaged in 2011-21)," Fitch forecasts on its article, APA reports.
"According to data from the Azerbaijani central bank, capital investment rose by 8.2% y-o-y on an annualised basis in the first eleven months of 2022; this follows full-year contractions of 8.2% y-o-y in 2021 and 7.5% y-o-y in 2020. Indeed, the capital investment growth has corresponded with the strong recovery in the non-oil and gas sector which has accelerated from 7.2% growth in 2021 as a whole to 9.1% on an annualised basis as of November 2022 (see chart below). The non-oil and gas sector have benefitted from shifting Russian trade away from Europe and more towards the East amid heavy EU sanctions against Russia (exempt in Azerbaijan) due to its invasion of Ukraine. Trade between Azerbaijan and Russia has reportedly risen by 23.0% (annualized) as of November 2022 and it now accounts for 12.0% of Azeri trade compared to around 8.0% in 2021. We expect these flows to remain strong in 2023 and as such capital investment in the non-oil and gas sector will continue to grow," reads the article.
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