BAKU, Azerbaijan, June 14. Azerbaijan’s economy is projected to grow by 3.5% in 2025, down from 4.1% in 2024, before slowing to 2.5% in 2026, Trend reports.
According to the agency, real GDP grew by 1.5% year-on-year in the first five months of 2025, driven primarily by a 3.9% expansion in the non-oil sector. Public investment and growth in non-oil industries are expected to remain the main drivers of economic activity.
Fitch notes that the hydrocarbon sector still contributes around 32% of GDP and accounts for up to 90% of Azerbaijan’s exports.
Despite an expected decline in global oil prices, Azerbaijan’s current account balance is forecast to remain in surplus — at 5.3% of GDP in 2025 and 4.9% in 2026. For comparison, the country’s average surplus from 2021 to 2024 stood at 15.6%, while the median for ‘BBB’ rated sovereigns is just 0.4%.
Fitch also highlights some potential for increased oil exports in the medium to long term, supported by the development of the Karabakh field and emerging onshore shale oil projects.
However, the agency expects Azerbaijan’s state budget to shift into deficit beginning in 2025, citing pressure on oil revenues, high (though gradually declining) capital expenditures related to the reconstruction of Karabakh, and rising defense and social spending.
Still, Fitch notes that the fiscal outlook could improve if non-oil revenues exceed expectations and capital spending is lower than currently projected.