Fiscal and external buffers remain strong in Azerbaijan, APA-Economics reports, citing European Bank for Reconstruction and Development's (EBRD) forecast for Azerbaijan's economic indicators.
According to the report state budget recorded a surplus of 4.4 per cent of GDP in the first half of 2025, slightly below that of 2024, as revenues and oil prices surpassed budget projections.
Foreign reserves (including the assets of SOFAZ, the state oil fund) reached US$ 78.8 billion by mid-2025, covering more than three years of imports. As a result, Moody’s upgraded Azerbaijan’s sovereign rating to Baa3 in June 2025, highlighting the country’s fiscal resilience.
EBRD highlights that headline inflation picked up from an average of 2.2 per cent in 2024 to 5.6 per cent in the first eight months of 2025, driven by rising prices of food and services. In July 2025, the Central Bank of Azerbaijan lowered its policy rate by 25 basis points to 7.0 per cent, bringing cumulative easing since late 2023 to 200 basis points, despite inflation running close to the upper end of the 4 per cent (±2) target band.
According to banks' forecast Azerbaijan's real GDP is forecast to grow by 2 per cent in 2025 and 2.5 per cent in 2026, with solid non-oil activity offset by weaker hydrocarbons. Energy price volatility, global trade uncertainty and regional geopolitics pose downside risks. Upside potential stems from the cooperation on energy with the EU, expansion of the Middle Corridor and the US-backed peace framework with Armenia, which could unlock new trade routes and improve investor confidence
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