Page 7 - Caucasus Outlook 2024

Inflation dropped to 0.4% at the end of the year, allowing rate cuts and boosting consumption, helped by wage growth of 17%.
In terms of vulnerabilities, the current account deficit widened to an estimated 5.9% of GDP in 2023 and is expected to increase to 6.4% in 2024. By contrast, gross external debt has fallen to around 79% of GDP as of the third quarter of 2023, the lowest level since 2014, and by November 2023, the National Bank of Georgia's international reserves hit a record high of $5.1 billion.
The Armenian economy was projected to grow by 7% in 2023, followed by 5% in 2024, with private consumption and investment as the main drivers of this growth. Inflation is expected to average 3.5% in 2023 and accelerate to 4% in 2024.
In terms of vulnerabilities, the main worry for Armenia is the budget, given the cost of integrating the Karabakh refugees and building up the country’s defence capacity. The government expects the state budget deficit to increase to 4.6% of GDP in 2024, compared to the planned 3.1% for 2023.
Petrostate Azerbaijan’s economy has been the poorest performer of the three because of falling oil prices and its declining oil production. In 2023 Azerbaijan's oil production with condensate decreased by 7.4% to 30.2mn tonnes. In 2024 oil production is forecast to fall a further 3% to 29.49mn tonnes. In terms of gas production, there was a 3.2% increase to 48.3bn cubic metres in 2023, with 2024 output expected to rise by 0.7% to 49.06 bcm.
This translated into a decline in the oil and gas sector of 1.7%, while the non-oil and gas sector grew by 3.7%, resulting in an estimated increase of just 1.1% in real GDP.
ING predicts 2.5% growth this year, while inflation is forecast to fall to 5% from an estimated 9.1% in 2023, which may help consumption revive. Future growth should also be boosted by reconstruction of the reconquered Nagorno-Karabakh territory.
The foreign exchange reserves of the Central Bank of Azerbaijan at the end of the year were a massive $11.613bn, up by 29.1%.
7 Central Asia & Caucasus Outlook 2021 www.intellinews.com