Reserves of Azerbaijan's State Oil Fund to continue growing — IMF

Reserves of the State Oil Fund of Azerbaijan (SOFAZ) will continue to increase if high hydrocarbon prices are maintained, Trend reports citing the International Monetary Fund (IMF).

According to the fund's report, Azerbaijan's economic growth is expected to accelerate slightly, while inflation will remain within the Central Bank's target range.

"According to experts' estimates, GDP growth will moderately accelerate to 2.1% in 2026 amid persistent weakness in oil and gas production. Non-oil GDP growth is projected at 3.7%, followed by stabilization around 3.5% in the medium term. The recovery reflects slower fiscal tightening expected in 2026, as well as positive spillover effects from rising oil and gas prices due to the war in the Middle East," the report states.

IMF analysts note that the output gap in the non-oil sector is expected to narrow but remain positive in 2026, before gradually closing over the medium term.

"The forecast for oil GDP, influenced by existing production restrictions, assumes a 2% decline in 2026, after which the pace of decline will slow to a moderate 0.5%, bringing overall GDP growth down to about 2.5% in the medium term. Inflation is expected to accelerate to 6% by the end of 2026 amid rising imported food inflation due to the war in the Middle East, which could also reduce real household incomes and demand. Meanwhile, the current account surplus is expected to increase significantly in 2026 thanks to higher hydrocarbon prices, before gradually narrowing over the medium term," the document notes.