Azerbaijan flag Azerbaijan: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Declining global gas and oil prices and the armed conflict between Armenia and Azerbaijan in Nagorno-Karabakh took a toll on the country’s economic growth in recent years. Nevertheless, after entering a recession in 2020, Azerbaijan’s economy rebounded in 2021 (+5.6%) and continued growing in 2022, with an estimated GDP increase of 3.7% according to the IMF thanks to the good performance of the non-oil sector, higher Russian remittances and a boost to the transportation sector following the Russia-Ukraine conflict. For 2023, the IMF expects lower oil and gas prices to weigh on the country’s energy sector (which accounts for more than half of the Azeri economy), with growth projected at 2.5% by the IMF.

The general government surplus was estimated at 10.6% of GDP in 2022, from 4.2% in 2021, driven by higher energy prices and strong non-oil receipts (Fitch Ratings). Additional extractive revenues were used to finance measures in favour of purchasing power, such as a food subsidy and a 20% increase in the minimum wage. As still-high oil and gas prices should counterbalance the increase in inflation-related social spending, the budget surplus is forecast at 6.7% of GDP for 2023. In 2022 Azerbaijan reinstated the limit on the growth of budget spending of 3% year-on-year and committed to a reduction in the non-oil primary deficit. Nevertheless, the debt-to-GDP ratio stood at 20.7% in 2022 but is expected to increase over the forecast horizon, to 22.1% this year and 23.8% in 2024 (IMF). Inflation rose to 12.2% in 2022 fuelled by a steep surge in food prices, exacerbated by disrupted imports from Russia and Ukraine. The central bank has tightened its policy, setting the main rate at 8.25% at the end of 2022. Real effective exchange rate appreciation and easing supply-chain disruptions should contribute to a reduction in inflation, projected at 10.8% in 2023 and 8% the following year. Overall, the country’s economic growth is still hampered by its dependence on the hydrocarbon sector and by the inefficiencies of the many state-owned enterprises.

After peaking in 2020, the unemployment rate returned on a downward path and stood at 5.9% in 2022. For 2023 and 2024, the IMF forecasts a rate of 5.8%. Azerbaijan’s GDP per capita (PPP) was estimated at USD 17,448 in 2022 (IMF). According to Asian Development Bank, 6.2% of the population lives below the national poverty line. Finally, the problem of corruption remains unresolved and may act as an impediment to the country's development.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 78.7277.3980.9884.2987.93
GDP (Constant Prices, Annual % Change) 4.62.52.52.52.5
GDP per Capita (USD) 7,7517,5307,7868,0088,254
General Government Gross Debt (in % of GDP) 17.318.218.020.822.9
Inflation Rate (%) n/a10.35.75.04.5
Unemployment Rate (% of the Labour Force) 5.95.95.85.75.7
Current Account (billions USD) 23.4812.6412.719.929.03
Current Account (in % of GDP) 29.816.315.711.810.3

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Azerbaijanian New Manat (AZN) - Average Annual Exchange Rate For 1 ZAR 0.110.130.130.120.10

Source: World Bank, 2015

 

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Latest Update: February 2024