"Azerbaijan’s economy grew strongly in 2024, driven by the non-oil sector and public investment. Real GDP expanded by 4.1 per cent in 2024, up from 1.4 per cent in 2023, with non-oil growth reaching 6.2 per cent, compared with 3.7 per cent in 2023," the European Bank for Reconstruction and Development (EBRD) said in its report titled Regional Economic Prospects - May 2025, APA reports.
The report noted that the main non-oil contributors to growth were the construction, ICT, transportation, and tourism sectors: "Economic activity was supported by rising real incomes and infrastructure investment, while the oil and gas sector returned to growth in March 2024, as gas production expanded to meet European demand. In the first quarter of 2025, real GDP grew by just 0.3 per cent year on year, compared with 4 per cent in the same period of 2024, as weaker oil and gas sector output offset solid momentum in the nonoil sector.
Meanwhile, inflation remained contained, fluctuating between 0 per cent year on 39 year in April 2024 (the lowest level in more than nine years) and 5.9 per cent in March 2025. The recent acceleration was driven by food and services prices, but inflation remains within the target range of the Central Bank of Azerbaijan (CBAR) of 4 per cent (±2 per cent).
The CBAR responded to easing inflation pressures in late 2023 by reducing the key policy rate cumulatively by 175 basis points, from 9 per cent in November 2023 to 7.25 per cent by May 2024, and has maintained it at this level since then. Recognising the need for additional measures to manage robust credit growth, which surpassed 20 per cent in 2024, the CBAR announced the activation of a 0.5 per cent countercyclical capital buffer, effective from March 2025."
According to EBRD real GDP growth is projected to moderate to 3 per cent in 2025 and 2.5 per cent in 2026. Growth will be supported by continued expansion in the non-oil economy and sustained public investment: "However, the outlook remains highly sensitive to fluctuations in oil and gas prices in the context of increased trade policy uncertainty, weaker external demand and potential setbacks in regional normalisation efforts. In the medium term, trade along the Middle Corridor connecting China to Europe could create opportunities for Azerbaijan’s transport and logistics sectors, as peace-building efforts may unlock new trade routes and investment flows.
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