BAKU, Azerbaijan, June 16. Azerbaijan’s economy has demonstrated resilience and is increasingly shifting toward non-oil growth, while maintaining its position as the largest economy in the South Caucasus, according to a report released during the annual meetings of the Islamic Development Bank (IsDB) in Baku.
The report, “Azerbaijan Rising: Economic & Investment Outlook”, prepared by Islamic Chamber of Commerce and Development (ICCD Holding), said Azerbaijan’s gross domestic product expanded from $47.11 billion in 2018 to $76.05 billion in 2025, supported initially by stronger oil markets and later by consumer demand and post-pandemic recovery in the non-oil economy.
“Azerbaijan's economy has exhibited significant resilience, characterized by a steady expansion of its GDP,” the report said. According to the report, Azerbaijan’s economy is undergoing structural transformation under the government’s Socio-Economic Development Strategy 2022–2026, with the non-oil and gas sector emerging as the main growth driver.
The non-oil sector accounted for 63% of GDP in 2025, up from 52% in 2018, while the hydrocarbon sector represented 27% of output.
Despite the reduced share in GDP, oil and gas remain central to state revenues. “Hydrocarbons remain the financial ‘backbone’ of the state, underpinning nearly 50% of total fiscal value and over 90% of export revenues,” the report said.
ICCD Holding said Azerbaijan’s investment strategy is increasingly focused on diversification. Total investment in fixed assets reached 21.2 billion manat (around $12.5 billion) in 2025. In January-March 2026, investments into fixed assets totaled $2.38 billion, up 14.9% year-on-year.
The report noted that oil and gas continue to dominate foreign direct investment inflows, accounting for 71% of total FDI, but highlighted government efforts to attract capital into agriculture, logistics, information and communication technologies, and tourism.
Public infrastructure spending and investment climate reforms have supported broader capital inflows, it added.
According to ICCD Holding, Azerbaijan’s foreign investment profile is showing signs of rebalancing.
While investment in the oil and gas sector is projected to decline to $1.27 billion in 2025 from a previous peak of $1.78 billion, investment in the non-oil sector is expected to more than double year-on-year to $620 million.
“This shift suggests that while energy remains the primary capital driver, the nation is successfully re-engaging international investors in non-extractive industries,” the report said.
The report also highlighted Azerbaijan’s energy transition goals, including plans to raise the share of renewables in electricity generation to 30% by 2030 and reduce greenhouse gas emissions by 40% by 2050.
Positioned between Western Asia and Eastern Europe, Azerbaijan continues to strengthen its role as a regional logistics and trade hub through the Trans-Caspian East-West Trade and Transit Corridor, which links China and Europe with an average transit time of 15 days. Foreign trade turnover reached $49.4 billion in 2025, up 3.8% from the previous year, with exports continuing to exceed imports, according to the report.
