Global
Fitch Upgrades Azerbaijan GDP Growth Forecast to 2.5% for 2026
March 9, 2026
4
Min
Fitch Solutions has upgraded its economic growth forecast for Azerbaijan to 2.5% in 2026, up from an estimated 1.4% expansion in 2025, according to a new outlook report. The improvement is attributed to accelerating domestic consumption, stronger investment flows, and continued momentum in the non-oil and gas sector, which by end-2025 accounted for more than half of GDP for the first time.
Private consumption is expected to contribute approximately 2.5 percentage points to overall growth, supported by a stable labor market, historically low unemployment at around 5.2%, and solid real wage gains. Investment activity is also projected to pick up, particularly in infrastructure, transport, and renewable energy, sectors where the government has prioritized strategic spending under its 2022-2026 socio-economic development strategy.
Azerbaijan's non-oil sectors have benefited from targeted policy measures and new trade and investment agreements concluded with partners including China, Germany, Turkey, and several European countries. Fitch anticipates that inflation will ease modestly to approximately 5.0% by year-end, down from 5.6% in 2025, remaining within the Central Bank of Azerbaijan's 2-6% target range. The central bank is expected to maintain a cautious stance, gradually reducing its benchmark rate, as Trend.az reported in its coverage of monetary policy developments.
Hydrocarbon revenues remain a key fiscal pillar but declining oil production continues to temper headline growth. The government expects a budget deficit of approximately 1.9% of GDP in 2026, reflecting deliberate fiscal restraint amid uncertain global oil market conditions. The manat exchange rate is expected to remain stable at AZN1.70 per USD.
For regional investors and businesses, the upgrade signals improving economic conditions and growing opportunities in Azerbaijan's rapidly expanding non-energy economy, particularly in logistics, manufacturing, fintech, and tourism sectors. Eurasianet notes that Azerbaijan's strategic position along the Middle Corridor trade route continues to attract fresh investor interest.
