Parliament has also lowered the budget deficit to 6.9 percent from 7.6 percent and the government's debt to 54.6 percent of Gross Domestic Product (GDP).

The bank said that the new forecast would also reflect an improved outlook for Armenia and Georgia.

More fighting on Azerbaijan-Armenia border, Baku says may enforce border on own

Continuing border skirmishes and incidents have hampered efforts to officially demarcate the border between the countries. Concern is growing about the stability of the late 2020 Moscow-negotiated armistice.

The reality is none of the three countries are formal candidates for EU membership in the near future.

The skirmishes have stirred concern about the stability of a late 2020 Moscow-negotiated armistice.