Azerbaijan overview

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Cityscape at night

In Azerbaijan we focus on:

  • Helping diversify Azerbaijan’s economy by supporting the development of the private sector in non-oil sectors and strengthening governance of private and state-owned companies.
  • Further expanding access to finance for local businesses by encouraging lending by banks and non-bank financial institutions as well as by helping develop local currency and capital markets.
  • Supporting to the country’s green economy, including financing for renewable energy sources, increased energy efficiency and cleaner transport and sustainable infrastructure.

As well as being a country where the EBRD works, Azerbaijan is also an EBRD donor. In 2019 Azerbaijan signed a $2 million contribution agreement to the Eastern Europe Energy Efficiency and Environment Partnership (E5P) Fund.

The EBRD’s latest Azerbaijan strategy was adopted on 25 April 2019

EBRD forecast for Azerbaijan’s Real GDP Growth in 2022 4.5 %

EBRD forecast for Azerbaijan's Real GDP Growth in 2023 2.5%

The strong performance of the non-energy sector led to economic growth of 6.2 per cent year-onyear in the first seven months of 2022. The nonenergy sector increased production by 9.9 per cent, while hydrocarbon sectors decreased by 0.4 per cent, with oil production down 4.5 per cent, though gas production increased by 15.3 per cent. However, rising prices of hydrocarbons almost doubled export revenues and generated a large current account and budget surplus. This created a favourable environment to sustain household real incomes, despite rising inflation, which in turn supported the strong growth of nontradable sectors of the economy. Inflation accelerated further from 12.0 per cent at the end of 2021 to 14.2 per cent in June 2022, but slowed down to 13.7 per cent in July as a first sign of abating inflationary pressures. The Central Bank of Azerbaijan responded firmly to rising inflation in the initial stage and raised the policy rate by 150 basis points between September 2021 and March 2022, but remained cautious afterwards. High energy prices are expected to support economic growth in the near term, but weak investment activity raises doubts about its medium-term sustainability. Hence, GDP growth of 4.5 per cent is forecast in 2022, with a moderation to 2.5 per cent in 2023. The risks are balanced and largely arise from the direction of energy prices and, to a smaller degree, from the likely inflation path.

Azerbaijan in the EBRD’s 2022-23 Transition Report

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