Azerbaijan Lowers Its Forecast for Non-Oil Growth to 3.1%
Azerbaijan's Ministry of Finance has lowered its 2026 growth forecast for non-oil-and-gas GDP from 5.0% to 3.1%. At the same time, it has raised its inflation forecast from 4.8% to 5.7%. Both revisions are included in the semi-annual report on budget execution, which the ministry published on August 18.
Overall growth remains unchanged at 1.7%. GDP is projected to rise to 138.0 billion manat in 2026, approximately 81 billion U.S. dollars. Of this, 100.0 billion manat is attributable to the non-oil sector.
Construction and Tourism Slow Growth
“The relatively lower growth rates in the construction and tourism sectors have influenced the overall forecasts for the non-oil and gas sector,” the Ministry of Finance’s report states. In nominal terms, the new forecast for the non-oil sector is 1.7 billion manat lower than the previous one.
The inflation adjustment is based on actual figures. From January through July 2026, consumer prices rose by 5.7% compared with the same period last year, according to the State Statistical Committee, Azerbaijan’s statistics agency. Food, beverages, and tobacco rose by 6.7%, non-food items by 3.8%, and services by 5.7%.
This puts inflation at the upper end of the central bank’s target range of 4% plus or minus 2 percentage points. The ministry cites global commodity and food prices—and their impact on import prices—as well as changes in regulated tariffs as the driving factors.
The budget remains comfortable
State budget revenues are expected to reach 39.365 billion manat, 2% more than in the approved plan. The ministry estimates the national debt at 27.6 billion manat at year-end. The government’s external debt fell by 7.5%. Strategic foreign exchange reserves are approaching 87 billion U.S. dollars.
For German companies, the structure of demand is shifting. The energy sector is thriving: From January through July 2026, Azerbaijan supplied 360,300 metric tons of crude oil and petroleum products worth $210.9 million to Germany, according to the State Customs Committee, Azerbaijan’s customs authority. Since early 2026, Azerbaijani gas has also been flowing directly to Germany and Austria.
Business is slowing in sectors where German suppliers typically generate revenue. Construction and tourism are bearing the brunt of the downturn. Anyone selling construction equipment, building materials, or hotel furnishings to Azerbaijan should adjust their sales forecasts for 2027 downward. Orders continue to come predominantly from government infrastructure programs, not from private investment.
Sources: APA-Economics (EN), AzerNews (EN), State Statistical Committee (EN/AZ), State Customs Committee (EN/AZ)
SK, Frankfurt