BAKU, Azerbaijan, Feb.18. The stability of
Azerbaijani manat is underpinned by robust FX reserves and prudent
Central Bank policy, Trend reports with reference to Allianz Trade,
the global leader in trade credit insurance.


“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. Domestic demand is constrained by slower wage growth and
cautious consumer sentiment, while 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 report.


Allianz analysts note that 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.


“Azerbaijan’s business environment is gradually improving, with
reforms in 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.
Continued focus on green energy, regional connectivity and human
capital development is essential for long-term competitiveness,”
the report says.







Allianz notes that 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. 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.”