The Asian Development Bank (ADB) has revised its forecast for Azerbaijan's GDP growth in 2026, lowering it from 2% to 1.6%, while its 2027 forecast remains unchanged at 1.8%.
According to the bank's Asian Development Outlook report, economic growth in Azerbaijan slowed in the first half of 2026 amid weaker performance in the hydrocarbon sector and slower growth in the non-oil sector: "In the first six months of 2026, growth was 0.8% compared with 1.5% in the same period of 2025. The hydrocarbon sector contracted by 0.7%, while other sectors of the economy grew by 1.5%."
The report notes that industrial output fell by 1.6%, compared with a 0.5% decline in the first half of 2025: "This was driven by a 3.1% drop in oil production, a 1.1% increase in natural gas output and a 13.0% decline in construction volumes."
"Growth in the services sector slowed to 3.0% from 3.1% a year earlier, reflecting slower expansion in tourism and communications. Agricultural growth accelerated to 2.2% from 1.4% on the back of a larger increase in livestock production. The slowdown is expected to continue until the end of the year, which is why the 2026 growth forecast has been lowered in this report, while the 2027 forecast is kept unchanged given the expected recovery of the economy," the ADB said.
The report notes that budget optimisation measures produced a budget surplus of 3.7% of GDP: "In the first half of 2026, the government continued to take measures to reduce dependence on hydrocarbon revenues and improve spending efficiency."
"Under this policy, transfers of hydrocarbon revenues from the sovereign fund to the state budget were reduced, as a result of which budget revenues fell to 29.4% of GDP from 32.0% in the first half of 2025. At the same time, higher tax receipts helped non-oil revenues rise by 6.8%, bringing their share of total revenues to 57%. Budget expenditures declined to 25.7% of GDP from 27.6% in the first half of 2025. Total expenditures fell by 1.9%, as a 23.8% drop in capital spending outweighed a 10.1% increase in current expenditures," the ADB report says.
