BAKU, Azerbaijan, March 9. The economic
stability of countries has a special place in the assessments of
international rating agencies in recent years, against the backdrop
of increasing geopolitical risks in the global economy, volatility
in energy markets, and uncertainty in financial markets. In this
context, the latest reports of leading global financial
institutions on the Azerbaijani economy and banking system indicate
that the country's financial stability is based on solid
foundations. Based on the analyses of these institutions, it can be
said that Azerbaijan's macroeconomic stability, high strategic
foreign exchange reserves, and strong banking sector play an
important role in maintaining economic stability not only
domestically but also in the region.
According to the latest report by Moody's, the outlook for the
Azerbaijani banking system remains 'positive'. The agency believes
that the favorable operating environment in the country and state
support will ensure the stability of the banking sector over the
next 12–18 months.
"Favorable operating conditions will support asset quality and
profitability over the next 12–18 months, while tightening
regulatory requirements will help strengthen capital and improve
liquidity management," the report said.
According to the agency's assessment, the high quality of assets
in the banking sector is directly related to the growth and
increase in income in the non-oil sector. This creates conditions
for the expansion of loan portfolios and increased stability of
banks.
The share of problem loans is also low compared to international
standards. At the end of 2025, this indicator amounted to
approximately 2.5% of the total loan portfolio, which indicates
that the banking sector has a healthy financial structure.
The level of capitalization of Azerbaijani banks is also highly
assessed by international agencies. Moody's noted that the ratio of
core capital to risk-weighted assets of rated banks operating in
the country averages 20%.
"Azerbaijan's rated banks have stable capital buffers, and
internal capital formation will continue to support high
capitalization," the report emphasized.
At the same time, liquidity indicators in the banking sector are
also quite high. Approximately 41% of the sector's assets consist
of liquid assets, which creates an additional safety buffer against
external financial shocks.
S&P Global Ratings also emphasizes the stability of the
Azerbaijani banking sector and predicts that lending will maintain
a stable growth rate in the coming years. According to the agency's
calculations, the annual growth rate of lending in the country from
2026 through 2027 may amount to approximately 10–12%. The report
noted that the modernization of regulation in the banking sector in
recent years has significantly contributed to the reduction of
risks:
"We believe that banking risks in Azerbaijan have decreased due
to initiatives aimed at modernizing regulation and supervision,"
the report explained.
This process includes steps such as the transition to a
risk-based control model, strengthening corporate governance
standards, and the introduction of international financial
reporting standards.
The overall development prospects of the Azerbaijani economy are
also positively assessed by international analysts.
According to the forecast of ING Group analysts, real GDP growth
in the country may be 2.5% in 2026 and 3% in 2027. Growth will be
ensured mainly due to the expansion of the non-oil sector. The
development of transport and logistics infrastructure, renewable
energy projects, and large-scale reconstruction work in the
Karabakh region also contribute to this process.
Azerbaijan's strategic foreign exchange reserves are also
considered one of the main factors of economic stability. At the
end of 2025, the country's strategic reserves exceeded $85 billion,
which is significantly higher than international adequacy
standards.
The Azerbaijani government has identified diversification of the
economy and the transition to a high-tech development model as one
of its priority areas.
"Diversification of the economy is the basis of our strategic
goals, and the non-oil and gas sector has already become the main
driver of economic growth." Minister of Economy Mikayil Jabbarov
noted in his speech on this topic.
According to the minister, in recent years, the average annual
real growth in the non-oil sector has been 5.9%, and the share of
this sector in GDP increased from 58.3% in 2018 to 71.5% in
2025.
Overall, these changes indicate that the structural
transformation of the Azerbaijani economy is proceeding
rapidly.
The stability of the Azerbaijani economy is of great importance
not only within the country, but also for the region. Developments
in the energy, logistics, and financial sectors create new economic
opportunities for the countries of the South Caucasus and Central
Asia. For example, transport and logistics projects - in
particular, the development of the Trans-Caspian International
Transport Route - contribute to the diversification of trade
between Europe and Asia. This strengthens regional economic
integration and allows international supply chains to become more
sustainable. In addition, foreign investments attracted to energy
and renewable energy projects create new investment flows and
technology transfer opportunities for the countries of the
region.
However, it's also important to take into account that global
geopolitical processes also have a certain impact on the economic
indicators of the countries of the region. According to the
assessment of analysts at ING Group, the increase in oil and gold
prices on world markets against the backdrop of the aggravation of
the military situation in the Middle East may provide short-term
support to Azerbaijan's external balance.
Analysts note that a sustained increase in the price of oil by
$10 per barrel increases Azerbaijan's export revenues by about $3
billion, which means an additional economic impact of about 4% of
the country's GDP. In terms of budget, such an increase can bring
about $1.5 billion in additional funds to state revenues.
At the same time, experts note that Azerbaijan's strong
financial reserves and stable macroeconomic policy allow limiting
the impact of global geopolitical risks on the economy.
Assessments by global rating agencies show that the Azerbaijani
economy is currently becoming one of the most stable financial
systems in the region due to its stable macroeconomic policy,
strong financial reserves, and stable banking sector. Energy
resources, developing transport and logistics infrastructure, and a
growing non-oil sector strengthen the country as an important
economic bridge between Europe and Asia. In this regard, the
economic and financial stability of Azerbaijan is of strategic
importance not only for national development, but also for the
economic security of the region and the stability of global trade
routes.
