BAKU, Azerbaijan, October 6. Azerbaijan’s GDP
is expected to grow from 1.2 percent in 2026 to 1.8 percent in
2027, the World Bank said in its latest report.
The economic growth is forecast at 1.9 percent in 2028, reads
the Europe and Central Asia Economic Update - October 2026 report
released by the Bank.
“Growth in Azerbaijan is likely to ease modestly to 1.2 percent
[in 2026] from 1.4 percent [in 2025] because of the continued
structural decline of the oil sector and weaker-than-expected
growth in the non-oil economy amid cuts to government capital
spending,” said the World Bank.
Meanwhile, the Bank analysts note that stronger expansion in the
non-oil economy in Azerbaijan is likely to lift growth from 1.2
percent in 2026 to an average of 1.8 percent in 2027-28 despite
declining oil production and planned fiscal consolidation.
Regionally, the report reveals that the countries of the South
Caucasus are set to grow by 3.5 percent this year, 0.4 percentage
point slower than in 2025.
According to the Central Bank of Azerbaijan’s macroeconomic
forecast published in May, the country’s real GDP is expected to
grow 1.1% in 2026, while the non-oil and gas sector is forecast to
expand by 3.2%.
The central bank expects the oil and gas sector to remain a drag
on overall growth in 2026, with non-oil industries serving as the
main driver of economic activity. Household consumption, net
exports of goods and services, and gross fixed capital formation
are expected to be the main contributors to non-oil growth.
The central bank forecasts economic growth to accelerate to 3.2%
in 2027, with the non-oil and gas sector expanding by 4.7%.
The oil and gas sector is projected to contract by 3.3% in 2026
and record no growth in 2027. “Thus, practically all of the
economic growth will be generated by the non-oil sector,” the
central bank said.
The 2026-27 growth outlook will depend largely on developments
in domestic and external aggregate demand, says the Central Bank of
Azerbaijan.
