Oil prices as a decisive economic factor

A sustained increase in global oil prices of $10 per barrel could bring Azerbaijan additional export revenues of around $3 billion per year. At the same time, government revenues from the energy sector would rise by around $1.5 billion. This is the conclusion of an analysis by Dutch bank ING.

The estimate comes from Dmitry Dolgin, chief economist for Russia and the CIS at ING. According to the calculations, the additional fiscal revenues would correspond to around two to four percent of Azerbaijan's gross domestic product.

Stable foreign trade and a stronger manat

According to Dolgin, higher oil prices could largely eliminate the risk of a foreign trade deficit in 2026. At the same time, the stability of the national currency, the manat, would be strengthened. However, the impact on economic growth is likely to remain limited. The reason: Azerbaijan can only increase its physical export volumes of oil and gas to a limited extent.

"Given the limited scope for increasing hydrocarbon exports, the short-term impact on economic growth is likely to be minimal," Dolgin explained.

At the same time, ING warns of rising import prices. Around 45 percent of Azerbaijan's imports come from industrialized countries or regions with increased geopolitical uncertainty. Rising energy prices could lead to higher production costs there and thus fuel import inflation in Azerbaijan.

Moderate growth expected

ING expects Azerbaijan's economy to grow by 2.5 percent in 2026 and 3 percent in 2027. Compared to its previous forecast, the bank lowered its growth estimate for 2026 by 0.3 percentage points, but raised its forecast for 2027 by one percentage point. This results in an average annual growth rate of around 2.75 percent for 2026 and 2027.

According to the bank's quarterly forecasts, the economy could grow by 3 percent in the first quarter of 2026, 2 percent in the second quarter, 4 percent in the third quarter, and 1 percent in the fourth quarter.

ING expects inflation to average 5.4 percent in 2026 and 4.6 percent in 2027. The forecast for 2026 has been revised slightly upward, while the expectation for 2027 has been lowered somewhat.

According to the bank's assessment, inflation is likely to decline gradually over the course of 2026 – from around 6 percent in the first quarter to around 4.9 percent at the end of the year.

Role of the oil sector remains central

Official statistics show that the Azerbaijani economy grew by 1.4 percent in 2025. Average inflation was 5.6 percent, up from 2.2 percent in 2024.

The national budget for 2026 is based on an assumed oil price of $65 per barrel. Currently, however, the price of Azeri Light crude oil is around $82 per barrel, while Brent futures are trading at around $81.

In 2025, Azerbaijan exported oil worth $12.1 billion. In the previous year, revenues were US$14.4 billion, with an average oil price of US$84 per barrel. The state's revenues from the oil and gas sector totaled 18.8 billion manat in 2025, up 7.2 percent from the previous year.

International forecasts similar

Other international institutions also expect moderate growth in the Azerbaijani economy. Rating agencies such as Fitch Ratings, Moody's, and Fitch Solutions anticipate growth rates of between 2 and 2.5 percent in the short term.

The International Monetary Fund and the World Bank, on the other hand, anticipate slightly lower growth rates.