BAKU, Azerbaijan, October 21. EU firms show a
growing investment interest in Karabakh and East Zangezur regions
of Azerbaijan, reads the EU Business Climate Report Azerbaijan
2025/26.
This eighth edition of the report, funded by the European Union
and prepared by VM Europe Consortium, presents an updated
assessment of Azerbaijan's economic and business environment from
the perspective of European companies active in the market.
The survey results indicate considerable interest among European
companies in Karabakh, East Zangezur and Nakhchivan as potential
investment destinations.
“The comparison between the 2024 and 2025 surveys indicates a
clear increase in European companies' active engagement with
Karabakh and East Zangezur, alongside continued interest in future
investment. The share of companies reporting that they have already
started working in the regions increased substantially, from 8% in
2024 to 19.4% in 2025. At the same time, the share of companies
preparing or waiting for a suitable investment opportunity remained
broadly stable. This suggests that some of the investment interest
observed in the previous survey may be translating into actual
business activity,” reads the report.
However, as the authors of the report say, the comparison should
be interpreted with some caution because the corresponding question
in 2025 also includes Nakhchivan, whereas the 2024 question covers
only Karabakh and East Zangezur. The survey results indicate that
European companies have a particularly high level of interest in
doing business in Nakhchivan.
“Although the reconstruction has not directly affected most
European companies, it has had a positive indirect effect on the
broader economy and increased demand for logistics services. Most
construction work is carried out by Turkish firms, while European
companies are mainly involved in freight transport from Europe.
Very few EU companies participate directly in reconstruction
projects, and those that do are often subcontractors introduced by
Turkish counterparts, typically operating as second-or third-tier
contractors,” reads the report.
The authors believe that finance companies could benefit from
informative, business-oriented visits to better assess local
opportunities, while vocational training and business
capacity-building linked to actual business development are
considered necessary to support asset-building before business
credit can become meaningful.
