13:06 - 23.06.2020

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June 23, Fineko/abc.az. The real effective exchange rate of the manat depends on the productivity of the domestic national economy.

ABC.AZ was made this statement by Vusal Gasimli, the executive director of the Center for Analysis of Economic Reforms & Communications.

He noted that currently, under the influence of the population growth and the pandemic, the country's GDP is declining. He added that for the first 5 months of this year GDP per capita decreased by 2.5%: "According to IMF’s panel calculations, the growth of relative productivity by 1% increases the real exchange rate of the national currency by 0.2%. A decrease in productivity in Azerbaijan in this sense could have a cheaper effect on the real effective exchange rate, but a smaller drop in productivity compared with the trading partner countries "neutralizes" this effect. According to the Balassa-Samuelson effect, this is a different level of productivity in the economies of developed and developing countries, which causes a price difference in them. In terms of purchasing power parity, prices in Azerbaijan are already lower than in developed countries.