On March 1, the World Bank (WB) forecasted Azerbaijan's economic growth to be 2.7% in 2025, with a steady decline to 2.4% in 2026, 2.3% in 2027, and 2.2% in 2028–2029, averaging 2.4% annually from 2025 to 2029.

The WB highlighted that oil production would continue to decline due to aging fields, while natural gas production would stabilize after peak levels in 2024–2025. Non-resource sectors like services and construction are expected to grow at 4% annually, with construction driven by public investment. The WB noted that structural reforms, including addressing the state’s economic dominance and improving financial markets and human capital, could boost growth rates.

Despite a narrowing surplus from the hydrocarbon sector, Azerbaijan’s external and fiscal positions are projected to remain strong. Risks such as geopolitical factors, global economic shifts, and climate challenges could impact the outlook. Azerbaijan’s Ministry of Economy forecasts GDP growth of 3.5% in 2024, while the Central Bank expects 3.3%. International rating agencies have differing predictions, with S&P Global estimating 2% growth, Fitch projecting 3% in 2025 and 2.4% in 2026, and Moody’s at 2.5% annually. In 2024, Azerbaijan’s economy is expected to grow by 4.1%.

Azerbaijan has ambitious climate goals, aiming to reduce associated gas emissions by 35% by 2030 compared to 1990 levels. To achieve this, the country plans to cut methane emissions and increase renewable energy’s share in installed capacity from 20% to 30% by 2030.

The World Bank also highlighted the importance of improving energy efficiency, particularly in the transport and housing sectors, as a key component of emissions reductions. Azerbaijan’s energy sector remains vital for its economy, with electricity demand growing annually by 2.9%. The WB emphasized the need for reforms in tariff policy, electricity transmission, and renewable energy expansion.

The government plans to list shares of the State Oil Company (SOCAR) in an IPO and separate electricity generation, distribution, and transmission. Azerbaijan’s Renewable Energy Agency has been established, and the country is committed to accelerating its energy transition. Phasing out oil subsidies and attracting private investment into renewable energy will be essential steps in achieving these goals, with the potential to export electricity through an underwater cable to create a green energy corridor with Romania, Georgia, and Hungary.