According to S&P Global Ratings lower oil prices will weigh on Azerbaijan's economic prospects, and reduced economic activity due to COVID-19 could exacerbate risks to short-term growth. They expect an economic contraction of 6.6% in 2020 followed by a rebound with growth of about 2.6% over 2021, APA reports citing the rating Agency.
"Azeri banks face growing challenges to their business growth and earnings prospects, which, along with remaining external vulnerabilities, could ultimately hit banks' capital buffers, asset quality, and funding stability harder than we previously envisaged.
We expect lower oil prices will weigh on Azerbaijan's economic prospects. Risks to growth in the short term could be further exacerbated by reduced activity due to the COVID-19 pandemic, which could exert significant pressure on the economy, specifically the trade, retail, and hospitality sectors. We expect an economic contraction of 6.6% in 2020 and project a rebound with growth averaging about 2.6% over 2021." S&P noted.