Azerbaijan’s economic growth will increase to 2% in 2026, APA-Economics reports.
The European Bank for Reconstruction and Development (EBRD) has released its forecast for Azerbaijan’s economic growth.
According to the bank’s assessment, Azerbaijan’s real GDP growth slowed to 1.4% in 2025. In the first quarter of 2026, the economy contracted by 0.3% year-on-year. This was caused by a 1.2% decline in oil and gas sector production and a slowdown in growth in the non-oil sector to 0.2%.
According to the report, average inflation stood at 5.7% in the first quarter of 2026, approaching the upper limit of the target range set by the Central Bank of Azerbaijan.
The EBRD notes that the budget surplus declined from 4.1% of GDP in 2024 to around 2.6% in 2025. The level of public and publicly guaranteed debt remained low, accounting for 28% of GDP at the end of the year.
According to the report, the current account surplus also fell from 6.3% of GDP in 2024 to 4.6% in 2025. Nevertheless, the combined foreign assets of the Central Bank of Azerbaijan and the State Oil Fund of Azerbaijan (SOFAZ) continued to grow, reaching 112% of GDP in 2025.
The EBRD expects Azerbaijan’s real GDP growth to accelerate after a weak start to 2026. The bank forecasts economic growth of 2% in 2026 and 2.5% in 2027.
The report emphasizes that Azerbaijan’s economic growth outlook remains dependent on oil and gas prices as well as production volumes. The conflict in the Middle East could raise global energy prices, generating additional revenue for the country and creating opportunities for spending and investment that support economic growth.
The EBRD also stated that the peace framework reached with Armenia through U.S. mediation could expand regional transport and trade links, while large-scale investments in renewable energy could support economic diversification and growth in the medium term.
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