BAKU, Azerbaijan, March 3. Azerbaijan’s economy is expected to see new opportunities in the transport and logistics sectors as trade along the Middle Corridor continues to develop, according to the latest outlook from the European Bank for Reconstruction and Development (EBRD), Trend reports.
The bank noted that public investment in infrastructure, agriculture, and defense is also set to support economic activity in the coming years.
Meanwhile, the country's economy expanded strongly in 2024, with real GDP growth reaching 4.1 percent, up from 1.1 percent in 2023. The non-oil sector was a key driver, growing by 6.2 percent, while infrastructure projects and rising real incomes further supported economic activity. The oil and gas sector also rebounded as gas production increased to meet European demand.
Inflation remained relatively stable throughout the year, fluctuating between 0 percent in April - the lowest level in more than nine years - and 4.9 percent by the end of 2024. Lower global food prices and state price regulations helped contain domestic food-price inflation.
In response to easing inflationary pressures, the Central Bank of Azerbaijan (CBAR) reduced the key policy rate from 9 percent in November 2023 to 7.25 percent by May 2024, where it has remained. However, with credit growth exceeding 20 percent in 2024, the CBA introduced a 0.5 percent countercyclical capital buffer, set to take effect in March 2025.
Looking ahead, GDP growth is projected to moderate to 3 percent in 2025 and 2.5 percent in 2026, with risks linked to fluctuations in oil and gas prices and regional geopolitical developments. However, growing trade along the Middle Corridor and government investments in key sectors are expected to provide economic support in the medium term.