BAKU, Azerbaijan, Feb.3. Natural gas exports and the non-oil sector will support Azerbaijan’s GDP growth in 2026, Trend reports with reference to Allianz Trade, the global leader in trade credit insurance.
“Azerbaijan’s economic momentum slowed in 2025, with GDP growth decelerating from +4.1% in 2024 to around +1.6% in 2025, but it is projected to recover to +2.6% in 2026 as natural gas exports and non-oil sectors expand. Inflation rose to 5.6% in 2025, driven by food and services, but remains within the central bank’s 4% ±2pps target. The manat remains stable, supported by strong reserves. However, external risks persist: global energy price volatility, trade disruptions and regional geopolitical tensions could dampen recovery. Investment remains tepid, especially in hydrocarbons. The outlook for 2026-2027 hinges on the pace of diversification, resilience of non-oil sectors and stability in global commodity markets,” reads the updated report by the Allianz Trade.
The report says public and external finances remain broadly comfortable, with fiscal and current account surpluses narrowing but still positive.
“The fiscal surplus is expected to moderate to around 2% of GDP in 2026, as oil revenues soften and social spending rises. The banking sector is stable, with credit growth supporting business activity, though profitability is pressured by higher funding costs. Insolvency data remains limited, but no major uptick is reported; however, weaker investment and tighter global financial conditions could elevate corporate default risks, especially among smaller firms, while an oil price level of around 60 USD/b could result in delayed payments to suppliers in the energy sector. External debt is low (below 10% of GDP) and sovereign risk is contained, but reliance on hydrocarbons for fiscal and export revenues remains a structural vulnerability,” says the Allianz Trade analysts.
Moreover, the report says Azerbaijan’s business environment is gradually improving, with reforms in state-owned enterprises (SOE) governance, beneficial ownership transparency and digitalization.
“Progress in renewable energy and infrastructure is notable, with several wind and solar projects reaching commissioning stage and upgrades to the transmission grid underway. Yet, environmental sustainability remains a challenge, with low scores in water management and recycling. Continued focus on green energy, regional connectivity and human capital development is essential for long-term competitiveness,” reads the report.