Baku, August 20, 2025 — Azerbaijan’s Ministry of Finance has revised its inflation forecast for 2025, projecting a 5.4% average annual inflation rate, up from the initial 4.6% and the April update of 5.1%.
The revision, published in the ministry’s report “Half-Year Budget Execution and End-Year Expectations”, reflects higher-than-expected price growth in global markets, the impact on imports, and adjustments to regulated tariffs for goods and services.
Economic Growth Outlook
The report also downgraded GDP growth expectations. Azerbaijan’s economy is now forecast to grow 3% this year, compared to the earlier projection of 3.7%. Non-oil GDP is projected at 93.5 billion manats, slightly higher than April’s estimate, but real growth in the non-oil sector has been cut from 4.9% to 4.6%.
By contrast, nominal GDP is expected to reach 129.9 billion manats, up by 0.7 billion from previous estimates, largely due to stronger energy revenues. The budget’s baseline oil price assumption of $70 per barrel remains unchanged.
Key Drivers
Imported inflation from global food and commodity markets.
Rising regulated tariffs for certain services.
Weak growth in agriculture and transport, weighing on the non-oil economy.
What It Means
The revision underscores the vulnerability of Azerbaijan’s economy to external shocks, particularly global price volatility. While energy exports continue to buffer the state budget, slower growth in the non-oil economy raises concerns about diversification and the cost of living.
