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EBRD forecasts stable growth in Azerbaijan in 2025

27 February 2025 10:50 (UTC +04:00)

European Bank for Reconstruction and Development (EBRD) forecasts stable growth in Azerbaijan in 2025, EBRD told APA-Economics.

After strong growth in 2024, the bank forecasts a 3% GDP growth in Azerbaijan in 2025:

*Azerbaijan’s economy grew by 4.1 percent in 2024 led by robust public investment
*GDP growth forecast to moderate to 3 per cent in 2025 and 2.5 per cent in 2026
*Economic outlook remains sensitive to oil price and geopolitical risks

Azerbaijan’s economy expanded significantly in 2024, with real GDP growth reaching 4.1 per cent, up from 1.1 per cent in 2023, the European Bank for Reconstruction and Development (EBRD) stated today in its latest Regional Economic Prospects report.

Growth was fuelled by strong non-oil sector performance (6.2 per cent growth) and public investment, while real income growth and the expansion of infrastructure projects further accelerated the economic activity.

After a period of contraction, the oil and gas sector rebounded in March 2024 as gas production expanded to meet growing European demand.

Meanwhile, inflation remained under control, fluctuating between 0 per cent year on year in April, the lowest level in over nine years and 4.9 per cent at the end of 2024. Factors such as state price regulation and lower global food prices helped stabilise domestic inflation, keeping consumer costs manageable.

Azerbaijan’s GDP growth is expected to moderate to 3 per cent in 2025 and 2.5 per cent in 2026. But the country’s economic outlook will remain highly sensitive to oil and gas price fluctuations and regional geopolitical developments.

In the medium term, Azerbaijan stands to benefit from increased trade via the Middle Corridor, connecting China and Central Asia to Europe. Additionally, public consumption is expected to rise, supported by government investments in infrastructure, agriculture and defence.

The EBRD is an important institutional investor in Azerbaijan. To date, the Bank has invested more than €4 billion in over 190 projects across the country, with a focus on diversifying the economy and supporting green climate initiatives.