BAKU, Azerbaijan, January 17. Azerbaijan's economy is gradually adjusting to lower hydrocarbon production, but continued reliance on oil revenues leaves growth exposed to risks from volatile oil prices and production challenges, while if trade and investment shift toward the region, it could also open up new opportunities for the country's economy, Anna Rose Bordon, head of the International Monetary Fund (IMF) mission in the country, told Trend.
"Other risks include heightened geopolitical and policy uncertainty, which could lower global growth and hydrocarbon prices, weakening growth in Azerbaijan. Conversely, the intensification of conflicts could push hydrocarbon prices up, providing a temporary boost to the Azerbaijani economy," she said.
According to the mission head, looking beyond the near-term outlook, deepening global geo-economic fragmentation and trade disruptions could make it harder for countries to diversify their economies. "In the long term, achieving sustainable growth will heavily depend on deepening economic diversification, strengthening fiscal discipline, and improving the business environment to support private investment," Bordon added.
Data from the Central Bank of Azerbaijan (CBA) shows that the country's real economic growth in 2026 will be 2% for total GDP and 4.4% for the non-oil and gas sector.
According to forecasts, the oil and gas sector will harm overall GDP growth in 2026, while the non-oil and gas sector will contribute to growth.
The CBA said that although the stimulating effect of household consumption on the non-oil and gas sector will moderate slightly, a positive impact from fixed asset accumulation is expected.
The oil and gas sector is projected to experience a real GDP decline of -0.2% in 2025 and -2.4% in 2026.