Panorama econòmic

Economic indicators

Azerbaijan’s reliance on hydrocarbons for exports and fiscal revenue is its main vulnerability, with declining oil production, price volatility, and the global shift from fossil fuels posing long-term growth challenges. Moreover, private sector development is hindered by a large state presence, uneven competition, shallow financial markets, and weak human capital. Declining global gas and oil prices and the armed conflict between Armenia and Azerbaijan in Nagorno-Karabakh took a toll on the country’s economic growth in recent years. Following the strong rebound from the pandemic (+4.6% of GDP in 2022), growth moderated to 1.1% in 2023 and picked up to 3.2% in 2024, driven by a slower decline in oil output and positive spillovers from Karabakh reconstruction. According to the World Bank, the hydrocarbon sector is set to decline in 2025–2026 due to ageing oil fields, with gas output stabilising. Non-oil growth will slow as reconstruction winds down and consumption weakens. Without reforms, growth is expected to stay near 2.5%.

In recent years, significant efforts were made by authorities to reduce the non-oil fiscal deficit. Fitch Ratings estimates Azerbaijan's consolidated budget surplus dropped sharply to 1% of GDP in 2024, down from 7.8% in 2023, due to strong spending growth offset by non-oil revenue and SOFAZ asset returns. The surplus is expected to remain stable in 2025-2026, with lower oil prices partly offset by higher non-oil revenue, including the end of pandemic-related tax relief. Karabakh-related spending is likely to decrease, but social and defence spending pressures will limit significant cuts. Government debt reached 21.1% of GDP in 2024 and is projected to approach 23.3% by 2026 (Fitch). External debt has declined, with improved currency composition and two-thirds owed to official creditors. Government guarantees and on-lending fell to USD 5.6 billion (7.6% of 2024 GDP), mostly linked to the profitable Southern Gas Corridor project, which is unlikely to need state support. Average annual inflation dropped to 2.2% in 2024 from 8.8% in 2023, within the Central Bank’s target, as food prices rose by 1.3%, non-food products by 1.6%, and services by 4% (official governmental figures). In the medium term, it is expected to hover around 3.2% amid slowing domestic demand, assuming no major external shocks (World Bank).

After peaking in 2020, the unemployment rate returned on a downward path and stood at 5.4% in 2024, and is expected to remain stable over the forecast horizon (IMF). In Azerbaijan, inequality is deemed moderate in comparison to other transition and petroleum-rich nations. The majority of Azerbaijani citizens have reaped the rewards of the country's remarkable economic expansion: the GDP per capita (PPP) was estimated at USD 24,698 in 2024 by the IMF, and according to the World Bank, less than 6% of the population lives below the national poverty line.

Vols fer algun comentari sobre aquest contingut? Escriu-nos.