"Moderating Growth; Retail Lending Risks: We project Azerbaijan's GDP growth to decelerate to 3.5% in 2025 and 2.5% in 2026 (from 4.1% in 2024), reflecting a slowdown in the oil and gas sector amid lower global prices," APA-Economics reports citing the international rating agency Fitch Ratings.
It was noted that the banking sector's average metrics have improved since 2017, with lowered loan dollarisation and reduced legacy asset-quality risks.
However, the rapid expansion of retail lending since 2021 could pose overheating risks, although the central bank takes proactive measures to mitigate credit risk in this segment.