EBRD: Economic Growth in Azerbaijan to Accelerate in 2026–2027
The European Bank for Reconstruction and Development (EBRD) forecasts that Azerbaijan’s economy will grow by 2% in 2026 and 2.5% in 2027.
According to Startup.az, this was stated in the February edition of the Bank’s “Regional Economic Prospects” report.
EBRD analysts note that the forecast remains sensitive to fluctuations in energy prices and production volumes. Potential supporting factors include the development of regional connectivity and trade initiatives within the framework of a peace agreement between Azerbaijan and Armenia mediated by the United States, as well as continued large-scale investments in renewable energy that could contribute to economic diversification.
According to EBRD estimates, economic momentum weakened in 2025: real GDP growth slowed to 1.4%, compared to 4.1% in 2024. The main reason was a 1.6% decline in hydrocarbon production.
Growth in the non-oil and gas sector also decelerated, dropping from 6.1% to 2.7%. Amid rising food and service prices, inflation accelerated to 5.6% in 2025, although it remained within the target range of the Central Bank of Azerbaijan (4% ±2 percentage points).
EBRD analysts also recalled that the Central Bank reduced its policy rate twice in 2025—by 25 basis points in both July and December. Since November 2023, the overall monetary easing has totaled 225 basis points. Additionally, on February 4, 2026, the regulator cut the rate again by 0.25 percentage points to 6.5%. The next decision on the interest rate corridor parameters is expected on April 2.
Despite slower growth, fiscal and external positions remain stable. In 2025, the state budget surplus amounted to 0.4% of GDP, while public debt stood at around 20% of GDP as of September.
Amid declining export revenues from energy resources and rising imports, the positive balance of foreign trade decreased in the first three quarters of 2025. International reserves—including assets of the State Oil Fund of Azerbaijan (SOFAZ) and the Central Bank’s foreign exchange reserves—reached $85.1 billion by December 2025, equivalent to 112% of GDP.
EBRD analysts also highlighted changes in the United States tariff regime. Before the Supreme Court decision, Azerbaijan’s nominal import tariff rate stood at 27.5%. Under the application of the IEEPA (“International Emergency Economic Powers Act”) and considering existing exemptions, the effective rate decreased to about 2%. After these provisions expired, the tariff rose to 25.6%. If a 10% tariff is applied (under S122), the rate would return to 27.5%, while a 15% tariff could increase it to 28.5%.