Fitch Ratings announces its outlook for inflation and economic growth in Azerbaijan

Fitch Ratings announces its outlook for inflation and economic growth in Azerbaijan
# 14 June 2025 02:08 (UTC +04:00)

Fitch Ratings has announced its outlook for inflation and economic growth in Azerbaijan, APA- Economics reports.

Inflationary Pressures: Headline inflation increased to 5.9% yoy in May, partly reflecting base effects and increases to minimum wages in 1Q25. Fitch projects annual average inflation of 5.3% in 2025 and 4.6% in 2026, within the central bank's tolerance band (4%+ 2 pp), and does not expect rate cuts until 2026.

Moderating Economic Growth: Real GDP grew by 1.5% yoy in January-May 2025, mainly driven by the non-hydrocarbon economy (3.9% yoy). We expect full-year growth of 3.5% in 2025 (2024: 4.1%) and 2.5% in 2026, with public investment and non-hydrocarbon sectors important drivers. Progress towards economic diversification (hydrocarbons account for 32% of GDP and up to 90% of exports) is constrained by the large state presence in the economy, limited financial intermediation, governance challenges, and low non-energy foreign investment.

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