Azerbaijan lowers its growth forecast

The Central Bank of Azerbaijan has significantly lowered its forecast for GDP growth in 2026. Instead of the 2.4 percent expected in February, it now anticipates growth of just 1.1 percent. At the same time, it nearly doubled its forecast for the current account surplus—from the previous range of $2.8 to $3.0 billion to $5.5 billion. Central Bank Governor Taleh Kazimov announced this on May 7.

The lower growth forecast reflects the impact of increased global uncertainty on trade and supply chains. At the same time, Azerbaijan is benefiting from higher prices for its commodity exports. However, the weaker momentum in the non-oil sector points to a decline in domestic demand. The central bank has not yet responded with a looser monetary policy, as inflation risks remain.

Weaker growth outside the oil sector

For the non-oil and gas sector, the Central Bank now expects growth of 3.2 percent in 2026. In February, the forecast had been 4.0 percent. For 2027, however, the CBA anticipates a slight improvement: total GDP is expected to grow by 3.2 percent, and the non-oil sector by 4.7 percent. Previously, the bank had expected 2.9 percent and 4.3 percent, respectively.

The differing forecasts paint a mixed picture: In terms of foreign trade, Azerbaijan is in a stronger position than previously assumed, while domestic economic momentum is weaker.

Current account benefits from higher energy prices

The improved current account forecast is primarily based on a strong foreign trade position. According to customs statistics, Azerbaijan achieved a trade surplus of $1.4 billion in the first quarter of 2026. This represents an increase of 93.3 percent compared to the previous year.

The central bank also raised its forecast for 2027. It now expects a current account surplus of $4.4 billion, up from the previous estimate of $2.7 to $2.8 billion.

The new assumptions regarding oil and gas prices are significantly higher than the estimates from February. The CBA now expects an average Brent price of $84.50 per barrel in 2026 and $78 in 2027. Previously, it had projected $65 for both years. For natural gas, the bank expects $324 per 1,000 cubic meters in 2026 and $290 in 2027, up from $269 and $254, respectively.

Foreign exchange reserves rose by 10.2 percent to $12.7 billion in the first four months of the year. This was due to a surplus in the foreign exchange market and purchase interventions by the central bank in April.