Azerbaijan economy contracted 3.5% y/y in 1Q16, as non-oil GDP weighed on growth
In 1Q15, real GDP fell 3.5% y/y, with non-oil GDP down 5.7% y/y and oil GDP up 0.8% y/y. Contraction was driven by a strong decline in construction (-32.5% y/y) and transport and storage (-14.5% y/y), while trade (+3.4% y/y), manufacturing (+5.7% y/y), and mining (+0.7% y/y) contributed positively. Excluding construction, non-oil GDP contracted 1.1% y/y in 1Q16.
In nominal terms, GDP in 1Q16 increased 9.1% y/y to AZN 12.6bn, while in US$ terms, it decreased 39.1% y/y to US$ 7.9bn.
Inflation rate at 9.2% y/y and 0.4% m/m in March 2016
Annual CPI inflation rate retreated slightly to 9.2% in March 2016 from 9.8% in the previous month, according to AzSTAT. In March, food prices were up 10.2% y/y (-1.6ppts m/m), non-food prices were up 14.5% y/y (0.0ppts m/m), and service sector prices were up 3.7% y/y (+0.4ppts m/m).
On a monthly basis, inflation rate was 0.4% in March 2016. Food prices were up 0.3% (-0.3ppts m/m), non-food prices were up 0.5% y/y (-0.1ppts m/m), and service sector prices were up 0.5% (+0.4ppts m/m).
Deposit dollarization inched down to 80.4% in February 2016
Total deposits in Azerbaijan decreased 5.8% m/m to AZN 21.3bn (+15.1% y/y), as FX deposits fell 7.9% m/m, while AZN deposits increased 4.1% m/m. In FX deposit structure, households’ and financial entities’ time deposits led the decline, while time deposits of non-financial entities were up. Overall, higher AZN-denominated non-household deposits led to a fall in dollarization ratio to 80.4% (-1.9ppts m/m).
NPL up 0.3ppts m/m to 6.5% in February 2016
The banking sector loan portfolio fell 4.1% m/m (-1.8% y/y) to AZN 20.3bn, on the back of reduced lending to households, industry and a fall in letter of credit, while a positive contribution came from a AZN 35.5mn increase in loans to transportation and communication sectors. Loan portfolio was down in state banks as well as private banks.
Overdue loans increased 1.1% m/m to AZN 1.3bn, driven by an increase in AZN-denominated overdue loans. As a result, the NPL ratio increased 0.3 ppts m/m to 6.5%.
