External and internal factors able to cause problem for macroeconomic stability revealed

# 08:18
29 December 2017

Main goal of Central Bank of Azerbaijan’s (CBA) monetary policy in 2018 will be to strengthen sustainability of macroeconomic stability frame, policy towards reduction of inflation expectations will continue, the CBA said in the statement on the main directions of the monetary policy for 2018 and the medium-term period, published on its website Dec. 29.  


According to the statement, the CBA formed its monetary policy targets by taking into account the macroeconomic forecasts: ‘Positive dynamics on macroeconomic performances are expected to continue in 2018’.


‘According to the recent forecasts of the government, the real growth rate will make up 1.5% on GDP, 2.9% on non-oil sector. State demand will remain one of the main factors of economic growth. In 2018, state expenditures are expected to increase through investment expenditures and this will support growth in non-oil sector’, the statement said.  


According to the statement, several internal and external factors may cause problems for targets of macroeconomic stability: ‘These factors mainly include oil price, if it is lower than predicted, and weakening of balance of payment in the partner countries as a result of decline in activity. Global price hike in food may cause additional import of inflation. High and non-symmetric inflation and expectations of exchange rate, as well as formation of fiscal deficit may affect macroeconomic stability. Non-restoration of financial intermediation and its continuation in accumulation of excess liquidity, deepening of problem of bad debts, complicated situation in the sector, as well as risks on financial situation of big state companies may threat economic growth. These risks are on the focus of the government and CBA. Financial stability Board will provide cose coordination of macroeconomic policy decisions.