BAKU, Azerbaijan, September 23. The Asian Development Bank (ADB) has revised its GDP growth forecasts for Azerbaijan from 2 percent to 1.6 percent for 2026, while the forecast for 2027 remained unchanged at 1.8 percent.
In its Asian Development Outlook, the Bank notes that economic growth in Azerbaijan slowed in the first half of 2026 as hydrocarbons declined and non-hydrocarbons weakened. It fell to 0.8% in the first 6 months—from 1.5% in the first half of 2025—as the hydrocarbon sector contracted by 0.7% while the rest of the economy expanded by 1.5%. Industry shrank by 1.6% compared to a 0.5% contraction in the first half of 2025, reflecting a 3.1% decline in oil production, a 1.1% rise in natural gas output, and a 13.0% drop in construction.
“Growth in services moderated to 3.0% from 3.1% a year earlier, reflecting slower expansion in tourism and communications. Growth in agriculture accelerated to 2.2% from 1.4%, driven by stronger expansion in livestock. With slower growth expected to continue through the end of the year, this report lowers the growth forecast for 2026 but maintains the 2027 forecast amid anticipated economic recovery,” said the ADB.
The report reveals that measures to optimize the budget led to a fiscal surplus equivalent to 3.7% of GDP. In the first half of 2026, the government continued efforts to reduce reliance on hydrocarbon revenues and improve expenditure efficiency.
“As part of this policy, it decreased transfers of hydrocarbon revenues from the sovereign wealth fund to the budget, which reduced budget revenue to 29.4% of GDP from 32.0% in the first half of 2025. However, higher tax collections boosted non-hydrocarbon revenue by 6.8%, raising its share of total revenue to 57%. Budget expenditure decreased to 25.7% of GDP from 27.6% in the first half of 2025. Total outlays fell by 1.9%, reflecting a 23.8% cut in capital expenditure that outweighed a 10.1% increase in current spending,” said the ADB.
According to the report published by the State Statistical Committee of Azerbaijan, the country’s GDP for the first seven months of this year totaled 76.818 billion manat ($45.1 billion). Compared to the same period in 2025, this figure increased by 1.4%.
During the reporting period, value added in the oil and gas sector of the economy decreased by 0.6% to 22.917 billion manat ($13.4 billion), while in the non-oil and gas sector it increased by 2.2% to 53.901 billion manat ($31.7 billion).
