Azerbaijan’s economic fundamentals remain strong, says Economy Minister

Azerbaijan’s key economic and financial pillars remain robust, Economy Minister Mikayil Jabbarov said during a forum in Baku titled “Vision for the Future of the Tax System: A New Governance Model and Data-Driven Decisions.”

As reported by AzerNEWS, Jabbarov noted that 2025 was a significant year for strengthening Azerbaijan’s international standing.

He said progress on the peace agenda has opened up major economic development prospects for both Azerbaijan and the wider region. Strategic partnership agreements signed with global economic partners are further enhancing the country’s growing geoeconomic role.

“These partnerships create new opportunities for deeper integration into global value chains across investment, trade, energy, digital transformation, artificial intelligence, high technologies, and other sectors,” the minister said.

Jabbarov emphasized that economic diversification remains a central strategic priority, with the non-oil and gas sector now serving as the primary driver of economic growth.

Between 2021 and 2025, Azerbaijan’s non-oil and gas GDP recorded average annual real growth of 5.9%, becoming the main source of economic expansion.

The minister also highlighted the important role of the private sector in diversification, supported by active government policies.

“In recent years, much of the state support for the private sector has been delivered through tax and customs incentives,” he said, adding that this strategic approach has led to significant qualitative and structural changes in the economy.

As a result, the private sector’s contribution to tax revenues has increased substantially. In 2024, revenues from the non-oil private sector accounted for 76% of total tax receipts from the non-oil and gas economy, according to Jabbarov.

He also noted that in 2025 investments in fixed capital directed to the non-oil private sector grew by 11.1%, while foreign-sourced investments in fixed capital increased by 24%.

Investment in the non-oil industrial sector rose by up to 26%, and the sector’s value added expanded by an average of 8% annually between 2021 and 2025.

These trends have significantly increased the role of the non-oil economy. Its share in GDP rose from 58.3% in 2018 to 71.5% in 2025, the minister said.

In 2025, tax revenues accounted for 12.7% of GDP, while tax revenues from the non-oil and gas sector represented 13% of non-oil GDP, marking increases of 3.4 and 2.4 percentage points, respectively, compared with 2018.

During the same period, the share of tax revenues from the private non-oil sector in GDP increased by 2.2 percentage points to reach 9.9%.

Jabbarov added that macroeconomic stability, strong investment protection mechanisms, and an improved business environment are creating long-term confidence for investors.

“Azerbaijan’s strategic geographic position, its transport and logistics capabilities, developed infrastructure in economic zones, tax and customs incentives, as well as public-private partnership mechanisms and joint investment funds with various countries offer investors opportunities to participate in sustainable projects and partnerships that bring technology, capital, and expertise,” he said.

Amid these positive economic trends, Azerbaijan’s sovereign credit rating has also improved. International rating agencies Fitch Ratings and Moody's have upgraded the country’s sovereign credit rating to investment grade, assigning outlooks of “stable” and “positive,” respectively, for the upcoming period.