BAKU, Azerbaijan, January 20. Azerbaijan’s economic growth is
expected to remain under 3% over the next two years as oil
production peaks, Fitch Ratings said, Trend reports.
Arvind Ramakrishnan, Director of EMEA Sovereign Ratings at
Fitch, said during a webinar that Azerbaijan’s debt stood just
above 20% of GDP in 2025, well below the 30% ceiling, leaving
little immediate concern over sovereign finances.
Oil production has “clearly peaked” in recent years,
Ramakrishnan noted, and gas production may also have reached a
near-term maximum. As a result, the oil sector contracted 2.7% in
2025, while the non-oil economy grew by 1.6%, contributing to an
overall growth rate of 1.4%, below both the government’s forecast
of 3% and Fitch’s own 1.8% estimate.
Fitch expects economic growth to pick up slightly in 2026 and
2027, remaining under 3%, driven primarily by the non-oil sector.
The sovereign’s strong external balance sheet supports financing
flexibility, while the current policy mix maintains robust external
buffers and limits macroeconomic imbalances.
Ramakrishnan highlighted several challenges, including slow
economic diversification, and a weaker macroeconomic and monetary
policy framework and governance relative to peers, despite
Azerbaijan having the lowest government debt among ‘BBB’-rated
sovereigns.
Fitch identified positive rating sensitivities including
continued strengthening of the economic policy framework, higher
energy revenues, maintenance of prudent policies, and successful
structural reforms supporting governance, growth, and
diversification.
