BAKU, Azerbaijan, June 16. Azerbaijan’s economy
has demonstrated resilience and is increasingly shifting toward
non-oil growth, while maintaining its position as the largest
economy in the South Caucasus, according to a report released
during the annual meetings of the Islamic Development Bank (IsDB)
in Baku.


The report, “Azerbaijan Rising: Economic & Investment Outlook”,
prepared by Islamic Chamber of Commerce and Development (ICCD
Holding), said Azerbaijan’s gross domestic product expanded from
$47.11 billion in 2018 to $76.05 billion in 2025, supported
initially by stronger oil markets and later by consumer demand and
post-pandemic recovery in the non-oil economy.


“Azerbaijan's economy has exhibited significant resilience,
characterized by a steady expansion of its GDP,” the report said.
According to the report, Azerbaijan’s economy is undergoing
structural transformation under the government’s Socio-Economic
Development Strategy 2022–2026, with the non-oil and gas sector
emerging as the main growth driver.


The non-oil sector accounted for 63% of GDP in 2025, up from 52%
in 2018, while the hydrocarbon sector represented 27% of
output.


Despite the reduced share in GDP, oil and gas remain central to
state revenues. “Hydrocarbons remain the financial ‘backbone’ of
the state, underpinning nearly 50% of total fiscal value and over
90% of export revenues,” the report said.


ICCD Holding said Azerbaijan’s investment strategy is
increasingly focused on diversification. Total investment in fixed
assets reached 21.2 billion manat (around $12.5 billion) in 2025.
In January-March 2026, investments into fixed assets totaled $2.38
billion, up 14.9% year-on-year.


The report noted that oil and gas continue to dominate foreign
direct investment inflows, accounting for 71% of total FDI, but
highlighted government efforts to attract capital into agriculture,
logistics, information and communication technologies, and
tourism.







Public infrastructure spending and investment climate reforms
have supported broader capital inflows, it added.


According to ICCD Holding, Azerbaijan’s foreign investment
profile is showing signs of rebalancing.


While investment in the oil and gas sector is projected to
decline to $1.27 billion in 2025 from a previous peak of $1.78
billion, investment in the non-oil sector is expected to more than
double year-on-year to $620 million.


“This shift suggests that while energy remains the primary
capital driver, the nation is successfully re-engaging
international investors in non-extractive industries,” the report
said.


The report also highlighted Azerbaijan’s energy transition
goals, including plans to raise the share of renewables in
electricity generation to 30% by 2030 and reduce greenhouse gas
emissions by 40% by 2050.


Positioned between Western Asia and Eastern Europe, Azerbaijan
continues to strengthen its role as a regional logistics and trade
hub through the Trans-Caspian East-West Trade and Transit Corridor,
which links China and Europe with an average transit time of 15
days. Foreign trade turnover reached $49.4 billion in 2025, up 3.8%
from the previous year, with exports continuing to exceed imports,
according to the report.