Real GDP expanded by 1.6% year on year in the first quarter of 2011, according to data from the State Statistics Committee (SSC), much slower than the 5.4% growth in the year-earlier period. Continuing the recent trend, the non-oil sector remained the main driver of growth, expanding by 5.6% year on year in January-March. The oil sector recorded a year-on-year contraction of 1.9%.

The SSC reported that Azerbaijan produced 12m tonnes of crude oil in the first quarter, marking a 2.5% year-on-year contraction. Gas production reached 6.3bn cu metres in the first quarter, a fall of 3.2% year on year. The government forecasts that total oil production will rise modestly, to 51.5m tonnes in 2011, compared with 50.8m tonnes in 2010. Global oil prices will be higher in 2011 than in 2010; we forecast an oil price of US$101/b in 2011, up from US$79.6/b in 2010. Nonetheless, higher oil prices will not be sufficient to offset the impact of the slowdown in oil production growth in 2011. In its latest World Economic Outlook, released in April, the IMF revised its real GDP forecast to 2.8%, from 1.8%. The government expects real GDP to expand by 3.8% in 2011.