The European Bank for Reconstruction and Development, in its September outlook, projects Azerbaijan’s economy to expand by 2% in 2025 and 2.5% in 2026. Compared with the May update, the 2025 forecast has been cut by one percentage point, while the estimate for 2026 remains the same.
According to the Bank, growth slowed to 1.5% in the first half of 2025, down from 4.1% the year before. The contraction of hydrocarbon production by 3.1% outweighed the solid 3.8% increase in non-oil activity, which was fueled mainly by construction, trade, and tourism. In the coming two years, stronger performance in the non-oil sector is expected to balance weaker oil and gas output. Risks to the outlook include energy price swings, global trade headwinds, and regional geopolitical uncertainty, while possible upside factors are linked to closer energy ties with the EU, progress on the Middle Corridor, and the U.S.-backed peace process with Armenia, which could unlock new transport links and bolster investor confidence.
Across Eastern Europe and the Caucasus, regional growth has also lost momentum: from 4.7% in 2023 to 3.9% in 2024 and further down to 2% in the first half of 2025. However, forecasts suggest a recovery to 3% in 2025 and 4.4% in 2026.
Azerbaijan’s Ministry of Economy is somewhat more optimistic, projecting GDP growth of 3% in 2025 and 2.9% in 2026. From January to August 2025, the economy expanded by 1%.
Other international institutions offer differing views. S&P Global foresees 2% growth annually in 2025–2026, while Fitch Ratings expects 3.5% in 2025 and 2.5% in 2026. Moody’s outlook stands at around 2.5% each year. The IMF estimates 3.5% and 2.5% growth for 2025 and 2026, respectively, the Asian Development Bank forecasts 3.4% and 3.3%, while the World Bank anticipates 2.6% and 2.4%.
