BAKU, Azerbaijan, January 20. Azerbaijan’s economic growth is expected to remain under 3% over the next two years as oil production peaks, Fitch Ratings said, Trend reports.
Arvind Ramakrishnan, Director of EMEA Sovereign Ratings at Fitch, said during a webinar that Azerbaijan’s debt stood just above 20% of GDP in 2025, well below the 30% ceiling, leaving little immediate concern over sovereign finances.
Oil production has “clearly peaked” in recent years, Ramakrishnan noted, and gas production may also have reached a near-term maximum. As a result, the oil sector contracted 2.7% in 2025, while the non-oil economy grew by 1.6%, contributing to an overall growth rate of 1.4%, below both the government’s forecast of 3% and Fitch’s own 1.8% estimate.
Fitch expects economic growth to pick up slightly in 2026 and 2027, remaining under 3%, driven primarily by the non-oil sector. The sovereign’s strong external balance sheet supports financing flexibility, while the current policy mix maintains robust external buffers and limits macroeconomic imbalances.
Ramakrishnan highlighted several challenges, including slow economic diversification, and a weaker macroeconomic and monetary policy framework and governance relative to peers, despite Azerbaijan having the lowest government debt among ‘BBB’-rated sovereigns.
Fitch identified positive rating sensitivities including continued strengthening of the economic policy framework, higher energy revenues, maintenance of prudent policies, and successful structural reforms supporting governance, growth, and diversification.