Azerbaijan.US
According to official data, Azerbaijan’s foreign trade turnover reached $49.423 billion in 2025. Of this total, $25.043 billion came from exports and $24.380 billion from imports. Year on year, exports declined by 5.7%, while imports surged by 15.8%.
The figures drew attention from prominent economist Natig Jafarli, who commented on the trend in a Facebook post. He argued that the export decline is directly linked to falling revenues from oil and gas, while the rise in imports reflects the weakening profitability of domestic production. If current policies remain unchanged, he warned, Azerbaijan’s foreign trade balance could turn negative as early as 2026.
Formally, the country still posted a positive trade balance of $663 million in 2025. However, compared with the previous year, that surplus has shrunk by more than eightfold. In practical terms, the margin of safety has nearly vanished. If the current trajectory continues, Azerbaijan risks slipping into a trade deficit for the first time in many years.
The reasons behind the imbalance are largely structural.
Exports are falling because they remain overwhelmingly dependent on oil and gas, including petroleum products. Revenues from these commodities are declining due both to price conditions and reduced volumes. Alternative export sectors capable of offsetting this downturn have yet to emerge at scale.
Imports, by contrast, are rising rapidly. Producing goods domestically has become increasingly unprofitable: taxes, fees, and inspections undermine competitiveness. At the same time, demand continues to grow as the population increases, construction remains active, and consumption expands. The outcome is predictable-greater dependence on foreign supplies.
Against this backdrop, the policy response is telling.
Instead of easing regulatory pressure and improving the business climate, the authorities appear to be moving in the opposite direction. A case in point is recent statements by the Azerbaijan Food Safety Agency, which announced preparations for a new state program, draft laws “On Plant Health” and “On Animal Health,” and the development of nearly ten new sanitary rules and standards.
In other words, one of the most controversial oversight bodies is not scaling back its reach but seeking to expand it-embracing a model of strict administrative control. This over-regulation approach has been widely criticized for contributing to economic stagnation in parts of the European Union.
What Azerbaijan needs, economists argue, is the opposite course: a compact and effective state, reasonable regulation, transparent customs procedures, lower taxes, and a system that treats small and medium-sized businesses as drivers of growth rather than sources of fines.
Reality, however, points elsewhere. Regulation is becoming more complex, fees and penalties are rising, and oversight is intensifying. The logic is straightforward: as budget revenues come under pressure, the state attempts to compensate by squeezing business. But this is a flawed strategy. It does not boost economic activity-it suppresses it.
Over the long term, such policies risk leading not to growth but to stagnation, an expanding shadow economy, and higher corruption risks. Economies need incentives, not additional barriers.
The rest, ultimately, is a choice for those making policy decisions.
