Fitch: Rising energy prices may contribute to economic growth in Azerbaijan
"The increase in oil and gas prices will have a positive impact on Azerbaijan's external and public finances, potentially contributing to accelerated economic growth in 2026."
As reported by APA-Economics, this was stated in a report by the international rating agency Fitch Ratings.
The report notes that the rise in hydrocarbon prices amid the war in the Middle East will strengthen Azerbaijan's twin surpluses. According to the agency's baseline scenario, in 2026, the current account surplus will remain at 4.5% of GDP, while the consolidated budget surplus will reach 2.1% of GDP, despite the expected decline in the profitability of the State Oil Fund's assets.
Analysts expect economic growth to accelerate again in 2026.
According to Fitch Ratings' estimates, the share of the non-oil sector in the economy remains volatile and largely dependent on oil prices. This indicator has decreased by 9 percentage points from its peak of 63.5% in 2015, amid oil prices reaching a 14-year high in 2022.
The agency highlights the growing contribution of the services sector, particularly information and communication technologies and tourism. Both sectors added 0.2 percentage points each to economic growth in 2025.
Analysts emphasize that Azerbaijan's strategic geographical position, including in the Caspian Sea, has increased the country's importance as a transit hub within the Middle Corridor framework. Following the start of the war in Ukraine, the volume of overland cargo transportation has more than doubled, averaging 27% of service exports in 2022–2024, with their share in GDP rising to 2.3%.
Additionally, Fitch Ratings notes a significant increase in non-oil budget revenues, which accounted for about half of total revenues (13% of GDP) in 2022–2025.
According to the fiscal rule, by 2029, the non-oil sector deficit should be reduced below 13% of non-oil GDP. For comparison, in 2024, this figure stood at 20.4%. The report stresses that achieving this target requires further increases in non-oil revenues and strengthening the institutional framework, including tighter controls and the establishment of clear fiscal benchmarks.
