Baku: Azerbaijan’s average annual economic growth is projected to reach 2.7% between 2025 and 2034, according to APA-Economics, citing a forecast by Fitch Solutions, a company within the Fitch Group.
According to Azeri-Press news agency, Azerbaijan’s economic growth trajectory is expected to stabilize over the forecast period, with a marked increase from the average growth rate of 1.5% recorded between 2014 and 2024. Fitch Solutions attributes this anticipated growth to Azerbaijan’s extensive energy resources, particularly natural gas, which are predicted to continue driving the economy over the next decade. The report highlights an increasing demand for Azerbaijan’s energy resources in the European market.
Since 2005, oil revenues have contributed approximately 30% of Azerbaijan’s GDP and accounted for more than 75% of state revenues in recent years. Despite a potential decline in oil production, the share of the oil sector in GDP is expected to remain significant in the medium term due to stable oil prices. The forecast also indicates a rise in GDP per capita from USD 8,558 in 2023 to USD 17,282 in 2034. Fitch Solutions points out upside risks for this indicator, considering currency stability, and suggests that growth in nominal incomes and consumption may support economic diversification beyond the oil and gas sector.
The report warns that heavy reliance on the energy sector could elevate the risks of ‘Dutch disease’ over the long term. Consequently, the government is planning measures to stimulate economic diversification. These measures include revising non-oil tax policy, implementing a unified tax system, and reducing VAT to promote medium-sized companies’ development.
Furthermore, the implementation of projects aimed at enhancing infrastructure in the energy and transport sectors is expected to foster a competitive non-energy sector, thereby supporting broader economic growth.