EBRD: Azerbaijan's economy growth will be 2.5% in 2026

The European Bank for Reconstruction and Development (EBRD) forecasts Azerbaijan's economic growth at 2% in 2025 and 2.5% in 2026.

As reported by BAKU.WS with reference to Report, this forecast is contained in the EBRD's September review "Regional Economic Prospects," published on the bank's website.

The assessment of Azerbaijan's GDP growth for 2025 has been downgraded by 1 percentage point compared to the May forecast, while the forecast for 2026 remains unchanged.

"Economic growth in Azerbaijan slowed from 4.1% in 2024 to 1.5% year-on-year in the first half of 2025, as the decline in the hydrocarbon extraction sector amounted to 3.1%, while activity in the non-oil sector grew by 3.8%, thanks to construction, trade, and tourism," the review notes.

The EBRD emphasizes that according to forecasts, real GDP will grow by 2% in 2025 and by 2.5% in 2026, driven by activity in the non-oil sector, which compensates for weaker performance in the oil sector. "Volatility in energy prices, uncertainty in global trade, and regional geopolitics present risks of economic slowdown. GDP growth potential is associated with energy cooperation with the EU, expansion of the Middle Corridor, the peaceful agenda in relations with Armenia supported by the US, which could open new trade routes and improve investor confidence," the report notes.

In Eastern Europe and the Caucasus, growth slowed from 4.7 percent in 2023 to 3.9 percent in 2024 and 2 percent in the first half of 2025, as momentum from intermediary trade and the influx of labor and capital into the Caucasus economy weakened. Average growth in the region is expected to accelerate to 3% in 2025 and 4.4% in 2026.

Recall that Azerbaijan's Ministry of Economy forecasts GDP growth for 2025 at 3%, and 2.9% for 2026. In January-August 2025, the country's economy grew by 1%.

Forecasts from international rating agencies vary: S&P Global expects growth in 2025-2026 at 2% per year, Fitch Ratings - 3.5% in 2025 and 2.5% in 2026, Moody's - 2.5% per year.

The International Monetary Fund forecasts growth for 2025-2026 at 3.5% and 2.5% respectively. The Asian Development Bank forecasts growth over the next two years at 3.4% and 3.3% respectively, while the World Bank expects economic growth in Azerbaijan at 2.6% in 2025 and 2.4% in 2026.