BAKU, Azerbaijan, May 28. The reserves of Azerbaijan's State Oil Fund (SOFAZ) will continue to grow, assuming hydrocarbon prices remain elevated, Trend reports citing the International Monetary Fund (IMF).
The Fund says in its latest report that Azerbaijan's economic growth is projected to pick up marginally and inflation to remain within the Central Bank's target band.
"Staff expect GDP to pick up moderately to 2.1 percent in 2026, amid continued weakness in oil and gas production. Nonoil GDP growth is projected to accelerate to 3.7 percent, before stabilizing at 3½ percent in the medium term. The rebound reflects a slower pace of fiscal tightening expected in 2026 and positive indirect effects of higher oil and gas prices due to the war in the Middle East," reads the report.
IMF analysts note that the output gap in the nonoil sector is expected to fall but remain positive in 2026, before gradually closing over the medium term.
"The outlook for oil GDP, which is driven by binding production constraints, is projected to decline by 2.0 percent in 2026 before slowing at a moderate pace of 0.5 percent, pushing down overall GDP growth to about 2½ percent in the medium term. Inflation is projected to pick up to 6.0 percent by end-2026, assuming higher imported food inflation amid the war in the Middle East, which could also erode real incomes and reduce demand. Nonetheless, the current account surplus is expected to improve significantly in 2026, owing to the increase in hydrocarbon prices, before weakening gradually over the medium term," the report says.
