Azerbaijan's industrial output shrinks by 0.4%: Central Bank buys $1.5 billion
Azerbaijan’s Statistical Committee reported a 0.4% decline in industrial production for January through August compared to the previous year. Through July, industrial production had still been up 0.3%. The oil and gas sector dragged the figure into negative territory: its value added fell by 0.8%. The overall economy grew by 1.2% to 87.7 billion manat, or approximately 44.5 billion euros. The committee released the figures on September 9.
Non-oil and gas industry grows by 5.4%
Industry excluding oil and gas increased by 5.4%, to 14.6 billion manat, or 7.4 billion euros. Gross domestic product excluding oil and gas grew by 2.1%. Transportation and warehousing grew by 8.7%, information and communication by 10.7%, and retail sales by 3.9%. Agricultural output increased by 2.6%.
Investments in property, plant, and equipment rose by 10.0% to 12.7 billion manat, or about 6.4 billion euros. In the non-oil and gas sector, however, they increased by only 1.4%. Growth is thus concentrated in the oil industry. According to the Statistics Committee, inflation stood at 5.7%. The Central Bank reported 5.8% for July, with a target range of 4% plus or minus 2 percentage points. The key interest rate has been at 6.5% since February.
Foreign Exchange Inflows Force Central Bank to Intervene
In foreign trade, exports rose by 39.1% from January to July to $20.1 billion. Imports fell by 27.4% to $9.9 billion. The committee reports non-oil and gas exports at US$5.9 billion, 2.8 times the previous year’s figure.
The surplus is putting pressure on the foreign exchange market. The Central Bank of Azerbaijan purchased $1.5 billion in August. In its September 7 statement, it explained the move as follows: “A current account surplus, combined with ongoing de-dollarization in the financial sector, has pushed the supply of foreign exchange above demand.” The bank reserves the right to release the purchased foreign exchange back into the market later this year.
The central bank’s foreign exchange reserves have risen by $3.8 billion, or 33%, since the beginning of the year, reaching a record high of $15.3 billion. The country’s strategic foreign exchange reserves stood at $90.8 billion as of September 1, up 15.7% from a year ago. The government’s external debt fell by 7.8% to $4.6 billion. The manat remains pegged at 1.70 per U.S. dollar.
For German exporters, the 27.4% decline in imports is a warning sign. Those who supply machinery or equipment to Azerbaijan are facing a shrinking oil sector and a non-oil sector where investment is growing by only 1.4%. At the same time, the foreign exchange surplus provides leeway: The central bank holds record reserves, the manat is stable, and payment risks are low. Growth areas include transportation, telecommunications, and the manufacturing industry outside the oil sector.
Sources: Statistical Committee of Azerbaijan, Macroeconomic Indicators January–August 2026, September 9, 2026 (EN); Central Bank of Azerbaijan, Statement on Foreign Exchange Market Intervention, September 7, 2026 (EN); Central Bank of Azerbaijan, Exchange Rates and Policy Rate (AZ)
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