Fitch forecasts economic growth in Azerbaijan

Fitch Ratings has outlined in its report that Azerbaijan’s economy is expected to grow at an average annual rate of 2.66 per cent from 2025 through 2030.

Fitch projects a GDP growth rate of 3.5 per cent in 2025, followed by 2.5 per cent growth in 2026. For the years 2027 to 2030, the agency anticipates a steady annual growth rate of approximately 2.5 per cent, Caliber.Az reports via local media.

The Azerbaijani Ministry of Economy offers a more optimistic forecast, predicting GDP growth of 3.7 per cent in 2025, 3.2 per cent in 2026, and 3.6 per cent in 2027.

Other international institutions provide varied outlooks for Azerbaijan’s economic growth: S&P Global anticipates around 2 per cent growth annually in 2025-2026.

Moody’s projects growth of 2.5 per cent per year during the same period. The International Monetary Fund (IMF) forecasts 3.5 per cent growth in 2025 and 2.5 per cent in 2026. 

The European Bank for Reconstruction and Development (EBRD) expects 3 per cent growth in 2025 and 2.5 per cent in 2026. The Asian Development Bank (ADB) predicts growth of 3.4 per cent in 2025 and 3.3 per cent in 2026. The Dutch ING Group forecasts 2 per cent growth in 2025 and 2.5 per cent in 2026. The World Bank projects 2.6 per cent growth in 2025, 2.4 per cent in 2026, and 2.3 per cent in 2027.

According to a forecast by Fitch Ratings, Azerbaijan is expected to maintain its de facto peg of the national currency to the US dollar at the current rate of 1.7 manats per dollar at least until the end of 2030.

Despite official plans to gradually introduce greater exchange rate flexibility over the medium term, Fitch notes that preserving a stable exchange rate remains a key policy priority for Azerbaijani authorities. The agency highlights that the Central Bank of Azerbaijan continues improving tools for managing structural excess liquidity in the banking system and is working to strengthen the transmission mechanism of its monetary policy.

“Nevertheless, the impact of monetary decisions on the broader economy remains limited,” Fitch analysts stated.

Among the limiting factors, the report cites underdeveloped domestic money markets, high banking sector liquidity, and a persistently high level of dollarization. 

As of April 2025, nearly 40 per cent of bank deposits in Azerbaijan were still denominated in foreign currencies, despite a gradual decline in that share. The manat has been pegged at 1.7 to the US dollar since 2017, a move initially aimed at curbing inflation and stabilizing the macroeconomic environment. 

In addition to Fitch, analysts at the Dutch ING Bank and the Asian Development Bank also expect the manat’s peg to remain in place through 2026. Meanwhile, the Azerbaijani Ministry of Economy and S&P Global Ratings forecast that the current fixed exchange rate regime will be maintained at least through the end of 2028.

By Naila Huseynova