Azernews.Az

By Aynur Jafarova

Foreign direct investment, mainly in oil and gas projects, increased by more than 23 percent in Azerbaijan in 2012, the Asian Development Bank (ADB) said in a report published on Tuesday.

"Foreign direct investment rose by 23.4 percent in 2012 from 3.2 percent in 2011, mainly reflecting investments in the second phase of the Shah Deniz gas field and in new oil field exploration. Official reserves at the end of 2012 totaled $12 billion," the Asian Development Outlook 2013 report said.

According to the report, total investment grew 20.9 percent while inflation fell to 1.1 percent from 7.9 percent recorded in 2011. However, inflation is projected to reach 6 percent in 2013 and 7 percent in 2014.

The report said that in 2012, the performance of the oil sector where output fell by 5.3 percent was poor due to the repairs at the main Azeri-Chirag-Guneshli oil platform. Production from the ACG oilfield is expected to increase slightly in 2013.

The ADB also said exports fell by 7.5 percent during the first nine months of 2012 as oil exports, which account for 94 percent of all exports, declined by 8.8 percent, mainly because lower oil production reduced the export volume.

"Energy output will grow a little through 2015 but is expected to expand more once gas field development is completed and the exploration of new oil fields proves successful, most likely after 2015," the report said.

According to the ADB, activity outside the oil sector is expected to be a major driver of growth in 2013 and the next few years.

Exports, led by hydrocarbons, are expected to contract by 2.1 percent in 2013 and to grow 1.7 percent in 2014, the bank said.