BAKU, Oct 20 (Reuters) - Azerbaijan expects its economy to grow significantly slower next year, due to a decline in oil prices and an expected smaller output of the energy sector, whose sales of oil and gas are key sources of state revenue.
Gross domestic product is forecast to grow 1.8 percent in 2016, down from the 4.4 percent expected in 2015. Parliament approved a 2016 budget on Tuesday based on an estimated oil price of $50 per barrel, down from $90 this year.
It sees total government revenues of 14.6 billion manats ($13.9 billion), down from 19.4 billion manats expected this year. Spending of 16.3 billion manats is forecast, down from 21.1 billion manats in 2015.
A deficit of 2.9 percent of GDP is expected, up from 2.6 percent of GDP in 2015. The oil sector is expected to decline to 53.5 percent of GDP next year from 65.3 percent in 2015.
Economic growth in Azerbaijan has slowed dramatically since the oil boom of 2003-2007, when the economy expanded by an average of 21 percent per year, as oil production begins to reach a plateau.
The former Soviet republic’s economy is now suffering from low oil prices and the repercussions of an economic crisis in the neighbouring Russia. Brent crude is now trading at around $50.
Azerbaijan, a mainly Muslim country between Russia and Iran, has tried to reduce its dependence on energy as oil production begins to plateau, using fuel revenues to spur other sectors of the economy, such as industry and agriculture.
The country expects to produce 40 million tonnes of oil and 30 billion cubic metres (bcm) of gas in 2016, a senior official at state energy company SOCAR said in September, roughly steady compared with this year.
Azerbaijan plans to produce 40.7 million tonnes of oil and 30.2 bcm of gas in 2015. (Reporting by Nailia Bagirova; Writing by Margarita Antidze; Editing by Lidia Kelly/Jeremy Gaunt)