On April 23, the World Bank (WB) forecasted that Azerbaijan’s economic growth would be 2.6% in 2025 and 2.4% in 2026, with an average growth of 2.5% for 2025–2026.

According to the WB’s update on economic prospects for the Europe and Central Asia region, titled Accelerating Growth through Entrepreneurship, Technology Adoption, and Innovation, the 2025 growth forecast for Azerbaijan was lowered by 0.1 percentage points compared to earlier predictions, while the 2026 forecast remained unchanged. For the broader Caucasus and Central Asia region, the WB projected a slowdown in economic activity, with growth expected to decline from 5.7% in 2024 to 3.6% in 2025 and 3.4% in 2026. In the South Caucasus, average growth for 2025–2026 was projected at 3.5%, nearly two percentage points lower than the previous year’s expansion. This slowdown was attributed to stabilized domestic demand, trade, and remittance inflows in Armenia and Georgia, as well as weaker growth in Azerbaijan due to declining oil production.

The WB’s update also highlighted fiscal challenges in the region, noting that Armenia’s fiscal deficit widened to 3.5% of GDP due to increased social spending, including support for refugees. Similarly, in Kazakhstan, flood relief, welfare programs, and lower oil-related revenues led to a larger fiscal deficit. Azerbaijan’s budget surplus was halved to 4.1% of GDP due to lower oil sector revenues and rising reconstruction spending.

The WB also stated that countries with higher money demand and better credit ratings, such as Azerbaijan, Kazakhstan, and Serbia, have greater fiscal space and the capacity to sustain larger debt.