BAKU, Azerbaijan, Feb.3. Natural gas exports
and the non-oil sector will support Azerbaijan’s GDP growth in
2026, Trend
reports with reference to Allianz Trade, the global leader in trade
credit insurance.


“Azerbaijan’s economic momentum slowed in 2025, with GDP growth
decelerating from +4.1% in 2024 to around +1.6% in 2025, but it is
projected to recover to +2.6% in 2026 as natural gas exports and
non-oil sectors expand. Inflation rose to 5.6% in 2025, driven by
food and services, but remains within the central bank’s 4% ±2pps
target. The manat remains stable, supported by strong reserves.
However, external risks persist: global energy price volatility,
trade disruptions and regional geopolitical tensions could dampen
recovery. Investment remains tepid, especially in hydrocarbons. The
outlook for 2026-2027 hinges on the pace of diversification,
resilience of non-oil sectors and stability in global commodity
markets,” reads the updated report by the Allianz Trade.


The report says public and external finances remain broadly
comfortable, with fiscal and current account surpluses narrowing
but still positive.


“The fiscal surplus is expected to moderate to around 2% of GDP
in 2026, as oil revenues soften and social spending rises. The
banking sector is stable, with credit growth supporting business
activity, though profitability is pressured by higher funding
costs. Insolvency data remains limited, but no major uptick is
reported; however, weaker investment and tighter global financial
conditions could elevate corporate default risks, especially among
smaller firms, while an oil price level of around 60 USD/b could
result in delayed payments to suppliers in the energy sector.
External debt is low (below 10% of GDP) and sovereign risk is
contained, but reliance on hydrocarbons for fiscal and export
revenues remains a structural vulnerability,” says the Allianz
Trade analysts.







Moreover, the report says Azerbaijan’s business environment is
gradually improving, with reforms in state-owned enterprises (SOE)
governance, beneficial ownership transparency and
digitalization.


“Progress in renewable energy and infrastructure is notable,
with several wind and solar projects reaching commissioning stage
and upgrades to the transmission grid underway. Yet, environmental
sustainability remains a challenge, with low scores in water
management and recycling. Continued focus on green energy, regional
connectivity and human capital development is essential for
long-term competitiveness,” reads the report.