BAKU, Azerbaijan, Feb.18. The stability of Azerbaijani manat is underpinned by robust FX reserves and prudent Central Bank policy, Trend reports with reference to Allianz Trade, the global leader in trade credit insurance.
“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. Domestic demand is constrained by slower wage growth and cautious consumer sentiment, while 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 report.
Allianz analysts note that 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.
“Azerbaijan’s business environment is gradually improving, with reforms in 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. Continued focus on green energy, regional connectivity and human capital development is essential for long-term competitiveness,” the report says.
Allianz notes that 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. 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.”