On February 27, the European Bank for Reconstruction and Development (EBRD) projected Azerbaijan’s economy to grow by 3% in 2025 and 2.5% in 2026, according to its latest Regional Economic Prospects update.

The growth forecasts were revised upward by 0.3 percentage points compared to the September estimates. The EBRD highlighted Azerbaijan’s economic sensitivity to oil and gas price fluctuations and regional geopolitical tensions. It noted that the Middle Corridor, connecting China to Europe, could present new opportunities for Azerbaijan’s transport and logistics sectors, while public consumption may benefit from increased government investment in infrastructure, agriculture, and defense.

Azerbaijan’s real GDP grew by 4.1% in 2024, significantly improving from 1.1% in 2023. This growth was primarily driven by the non-oil sector, which expanded by 6.2%, while inflation remained stable—ranging from 0% in April 2024 to 4.9% by year-end—supported by state price regulations and declining global food prices.

Nataly Mouravidze, Head of the EBRD Resident Office in Azerbaijan, emphasized the EBRD’s support for Azerbaijan’s hydrogen strategy and broader green energy transition. She noted the bank’s involvement in developing the National Hydrogen Strategic Outlook, presented at COP29, and its focus on a low-carbon and climate-resilient pathway for Azerbaijan’s power generation.

The EBRD has already financed over 1.2 gigawatts of renewable energy projects in Azerbaijan, including the Garadagh Solar Plant (230 MW) and the Absheron-Khizi Wind Power Plant (240 MW). It also played a key role in supporting Azerbaijan’s first renewable energy auction and establishing the Azerbaijan Energy Regulatory Authority (AERA).

Regarding the expansion of the Southern Gas Corridor (SGC), Mouravidze stated that the EBRD is prepared to conduct a comprehensive assessment if requested by Azerbaijan, stressing the need for alignment with Paris Agreement obligations. The SGC, which includes the Shah Deniz project and pipelines linking Azerbaijan to Europe via Türkiye, initially cost $33 billion, with the EBRD contributing a $500 million loan for the Trans Adriatic Pipeline (TAP). There are plans to increase TAP’s capacity to 16–20 billion cubic meters per year by 2027, with Azerbaijan currently supplying natural gas to 12 countries.