Azerbaijan’s oil and gas sector is expected to gain momentum in the short term as supplies through the TAP pipeline ramp up to meet growing gas demand in Europe, Report informs referring to the research by Russia’s Gazprombank.

“In the oil and gas sector [in January-February], the decline decelerated to 3.6% YoY (vs. -4.6% in January). This stemmed from a 4% YoY increase of gas production,” the bank’s analysts noted.

The January-February GDP dynamic in Azerbaijan was mainly related to the high-base effect from last year, when economic growth amounted to 6.7% YoY: “Interestingly, amid falling oil prices, a key driver of Azerbaijan’s economic growth was the non-oil & gas sector. Growth in the non-oil and gas sector recovered to 4.6% YoY from 1.7% YoY, in line with our expectations. This was the main factor that drove Azerbaijan’s economy into positive territory in 2M23. We believe growth in the non-oil & gas sector will continue to recover in March on the back of implementation of projects in Karabakh.

To remind, these projects are providing a strong momentum to development of Azerbaijan’s non-oil & gas sector. The country’s prime minister said last week that about 6.5 billion manats (~5% of GDP) had been spent in 2022 to finance these projects,” reads the report.

“According to preliminary data from the Statistics Committee of Azerbaijan, the country’s GDP increased by 0.4% YoY in 2M23 and amounted to 19.8 billion manats ($11.6 billion). Industry was the main contributor to the structure of GDP with a share of 50.3%. Azerbaijan economy expectedly reverted to growth in February. Neutral for Eurobonds.”