AGP Executive Report

Currency and Reserves: The manat held at 1.7000 to the dollar throughout the week, while the euro and rouble rose against it. Azerbaijan’s $15.4 billion reserve cushion and government projections point to a continued 1.70 rate through 2030. Energy Trade: Azerbaijan plans to resume gas purchases from Gazprom, with volumes and timing still undecided, and has restarted two-way gas trade with Iran. Nearly 30 billion cubic metres of gas have moved through the country’s main pipelines this year. Regional Business Links: Azerbaijan and Uzbekistan are expanding cooperation, including a new trade-union agreement and reviews of the joint SOCAR-BP Ustyurt exploration project. Investment and Diversification: Azerbaijan is targeting an 82% non-oil share of GDP, while a planned $2.6 billion energy expansion supports an 8-gigawatt green-power goal. The government is also discussing fiscal reforms and investment cooperation with the IMF and Asian Development Bank.

Energy Trade: Azerbaijan and Iran have resumed two-way natural gas trade, with Tehran signaling interest in wider cooperation. SOCAR also wants to resume gas purchases from Russia’s Gazprom, but volumes and timing remain undecided. Economic Reform: Azerbaijan discussed fiscal reforms, diversification and investment with the IMF and Asian Development Bank, while the IMF positively assessed efforts to raise non-oil revenues. Baku is targeting an 82% non-oil share of GDP. Transport and Power: Cargo transportation rose 3% this year, while wind power generation increased more than 27-fold. However, electricity, gas and steam output fell 2.2% in the first nine months year on year.

Fiscal Reform: Azerbaijan has discussed budget management, economic diversification and investment cooperation with the IMF and Asian Development Bank, while seeking expanded IMF technical assistance. The IMF has praised progress in raising non-oil revenues. Energy Trade: Azerbaijan resumed two-way gas trade with Iran in the first eight months of 2026, importing more than it exported. SOCAR also says it wants to restart gas purchases and exchanges with Gazprom, though no volumes or dates have been agreed. Growth and Investment: The government aims for the non-oil sector to make up 82% of GDP by 2030. The World Bank has mobilized nearly $100 million in private capital for Azerbaijan. Transport and Connectivity: Cargo shipments rose 3% in January–September, while Kazakhstan and Azerbaijan launched a 380-kilometre Trans-Caspian fibre-optic link to strengthen the region’s digital connection to Europe.

Investment and Reform: The World Bank says it mobilized nearly $100 million in private capital for Azerbaijan. The IMF praised gains in non-oil revenue, as Baku sought expanded technical support for fiscal reforms. Finance: Central Bank Governor Taleh Kazimov says financial-sector strategy implementation reached 85.6% in 2025, with AI and data analytics among priorities for improving monetary policy. Trade and Connectivity: Azerbaijan and Kazakhstan launched a 380-kilometre Trans-Caspian fiber-optic cable, while regional partners discussed boosting Middle Corridor transport links. Energy: Azerbaijan plans 11 power plants with about 2 GW of capacity by end-2027, backed by $2.6 billion in investment, and aims for 8 GW of solar and wind power by 2032. SOCAR says it wants to resume Russian gas purchases; Azerbaijan has supplied Vietnam with more than 1.1 million tonnes of crude since 2023. Oil Outlook: The 2027 budget framework assumes prices will stay above $65 a barrel, though officials warn market swings could affect the budget and sovereign fund assets.

Private Investment: The World Bank Group says it mobilized about $100 million in private capital for Azerbaijan in fiscal 2026, supporting priorities such as SME finance, job creation and renewable energy. Energy: Iran and Azerbaijan are discussing underground energy-storage facilities. Separately, the Finance Ministry says $5–$20 oil-price swings could affect the 2027 budget balance and SOFAZ assets, though it sees the risks as limited. Regional Trade: Azerbaijan and Kazakhstan agreed to develop the Middle Corridor, aim to lift bilateral trade to $1 billion and launched a 380-kilometre Trans-Caspian fiber-optic link. ADY also discussed digital freight and rail cooperation with regional operators. Agriculture: Azerbaijani officials and Chinese businesses explored smart farming, greenhouse and food-processing investments. Economic Pulse: GDP grew 1.5% in January–September; the IMF forecasts 1.7% growth for 2026 and 2.3% for 2027.

Regional Connectivity: Azerbaijan and Kazakhstan agreed to develop the Middle Corridor, while leaders launched a Trans-Caspian fiber-optic link and reaffirmed a goal of lifting bilateral trade to $1 billion. Energy: Azerbaijan’s oil sold above $124 a barrel, exports topped 15 million tonnes this year, and natural gas exports increased. The country was Türkiye’s second-largest pipeline gas supplier in August. Trade & Investment: Azerbaijan’s foreign trade reached $33.9 billion in January–August, with a surplus above $11 billion; non-oil exports rose 20.5% in January–September. Chinese companies are exploring agricultural investment and technology projects in Azerbaijan. Economic Reform: The government plans new renewable-energy auctions from 2028 and is preparing digital transformation roadmaps for 18 local enterprises.

China and Connectivity: Azerbaijan and China discussed expanding trade, investment, energy and logistics ties, with both highlighting the Middle Corridor’s role linking Asia and Europe. At the CICA summit, Azerbaijan’s chairmanship was extended for two years, while Kazakhstan proposed a regional transport strategy spanning key Eurasian corridors. Energy: Azerbaijan exported 15.5 million tonnes of oil and 18.4 billion cubic metres of gas in the first nine months of 2026. Gas exports edged up 0.5% year-on-year, while crude output remained below the country’s OPEC+ quota. Azeri Light fell 2.92% to $124.14 a barrel, still well above the budget’s $65 benchmark. Mining: Anglo Asian Mining’s third-quarter copper output jumped 141% year-on-year to 5,514 tonnes. Regional Investment: Kazakhstan pledged an additional $25 million to an IMF regional capacity-building centre that supports Azerbaijan and eight other countries. Kazakhstan also aims to lift annual transit cargo to 100 million tonnes by 2035.

Trade & Investment: Azerbaijan and Laos opened a business forum and are moving toward a bilateral investment treaty, while talks with Uzbekistan highlighted rising trade and projects in energy, transport, construction and logistics. Caspian Logistics: Azerbaijan and Kazakhstan are seeking tighter coordination between Baku, Aktau and Kuryk ports, including digital data exchange. Six countries also agreed to streamline customs, tariffs and cargo transfers along the CASCA+ route. Business Climate: Electricity grid connections will require two procedures instead of seven, with the wait cut from 41 days to 20. Azerbaijan is also drafting rules to expand the services fintech firms can offer. Banking: AccessBank reported third-quarter net profit of AZN 45.2 million, up from AZN 35.6 million a year earlier, as business lending and deposits grew. Reconstruction: Azerbaijan says AZN 25.5 billion has gone to rebuilding Garabagh and East Zangezur, which officials aim to develop as new centers of economic growth.

Economic Outlook: Azerbaijan’s GDP grew 1.5% in January–September. The IMF forecasts growth of 1.7% this year and 2.3% in 2027, and raised its estimate of the 2026 current-account surplus to 11.3% of GDP. Rebuilding Garabagh: Caspian Construction Week opened in Baku, showcasing investment opportunities in the liberated territories. The government says 25.5 billion manats has gone to reconstruction, with nearly 1,500 kilometres of roads built; tax breaks, concessional loans and other incentives are available to businesses. Energy: TotalEnergies has taken a final investment decision on the Absheron gas field’s full-field development, with Vallourec awarded a pipe-supply contract. New Partnerships: Azerbaijan and Laos held an investment and business forum in Baku, while President Ilham Aliyev said Azerbaijan could consider projects proposed by Lao investors. Banking & Finance: IE Business School’s new case study highlights ABB Bank’s transformation: its mobile users rose to 2.6 million in 2025, and product development time fell from 243 days to 59. Transport: The Asian Development Bank approved a $302 million loan to modernize the Baku Metro.

Economic Outlook: Azerbaijan’s GDP grew 1.5% in January–September. The IMF projects growth of 1.7% this year and 2.3% in 2027, while raising its inflation forecast and current-account surplus outlook. Investment & Connectivity: The Asian Development Bank approved a $302.38 million loan to modernize Baku Metro. Nakhchivan’s economy grew 3.5%, and railway work is advancing on a planned link toward the Zangezur Corridor. Trade & Industry: Non-oil exports rose 20.5% in January–September; Azerbaijan is also pursuing new investment and trade ties with Laos and Cambodia. TotalEnergies has taken a final investment decision on the Absheron gas field’s full development. Digital Finance: Cashless payments account for nearly 70% of transactions, while daily use of the instant payment system has reached one million; the Central Bank is exploring a shared fintech framework with Turkic states. Shipping Risk: Eight Azerbaijani crew members were among 15 rescued after drones struck a merchant ship off Bulgaria, underscoring risks to Black Sea trade routes.

Black Sea Shipping: Drone strikes near Bulgaria damaged a vessel carrying eight Azerbaijani crew members and sank another, with 11 sailors missing. The attacks highlight growing risks to commercial shipping, though responsibility has not been established. Fintech: Baku’s forum on Turkic-state cooperation focused on shared payment systems and regulatory links. Azerbaijan’s instant-payment system now handles one million transactions a day, while cashless payments reached 69.8% of card transactions by August. New Markets: Azerbaijan and Cambodia signed agreements on economic cooperation and double taxation, and are working on a trade and investment roadmap. Baku also plans a business forum with Laos to deepen trade and investment ties. Energy: TotalEnergies awarded Vallourec a major pipe-supply contract for the Absheron gas field, planned to produce up to 6 billion cubic metres of gas annually. Outlook and Trade: The IMF forecasts Azerbaijan’s GDP growth at 1.7% in 2026 and 2.3% in 2027. Foreign trade turnover reached $33.9 billion in January–August, while non-oil exports rose 20.5% year on year in the first nine months. Infrastructure: The Asian Development Bank approved a $302 million loan to modernize the Baku Metro.

Cambodia Business Links: Azerbaijan and Cambodia signed trade and economic cooperation and double-taxation agreements during Prime Minister Hun Manet’s Baku visit. Officials plan a roadmap to expand trade and investment, while an investment-protection pact is in preparation. Trade: Azerbaijan’s foreign trade turnover rose 7.4% year-on-year to $33.9 billion in January–August. Exports climbed 36.2% to $22.5 billion, while imports fell 24.1% to $11.4 billion. Energy: TotalEnergies awarded Vallourec a contract for more than 16,000 tonnes of pipes for the Absheron gas field, expected to start production in 2029. Separately, President Ilham Aliyev approved a production-sharing agreement for exploration and development in the Guba-Caspian region. Economic Shift: Economy Minister Mikayil Jabbarov said the non-oil and gas sector accounted for 72% of GDP in 2025, after averaging 5% annual growth since 2020.

Czech Trade: A Baku business forum spotlighted transport, logistics and industrial partnerships. Bilateral trade reached about $760 million in January–August, Czech investment in Azerbaijan totaled $74 million—mostly outside oil and gas—and transit cargo grew 47%. Gas Exports: Slovakia is considering Azerbaijani gas as it prepares to replace Russian supplies from 2027. Absheron Field: Vallourec won a TotalEnergies contract to supply more than 16,000 tonnes of pipes for the offshore gas project. Mining: State-owned AzerGold is exploring investment and joint projects in Colombia. Regional Business: Georgia registered 418 companies with Azerbaijani capital in the first nine months of 2026; Cambodia and Azerbaijan also agreed to establish a trade working group. Infrastructure Finance: AIIB approved $45 million in financing for Azerbaijan’s first large-scale seawater desalination plant.

Middle Corridor: Azerbaijan Railways received 416 block trains from China in January–September, up 40% year on year, bolstering the country’s role in Eurasian trade. Trade & Investment: Fixed-capital investment rose 10.9%, while cotton export revenue increased 23.3% in January–August. A new fertilizer plant is targeting export markets four times the size of Azerbaijan’s domestic market. Public Finances: Fitch expects budget surpluses above 2% in 2026 and 2027, even as the State Oil Fund’s assets fell by $1.45 billion amid a global market downturn. Business Ties: President Ilham Aliyev and Pakistan’s prime minister agreed to turn close political relations into stronger investment and commercial links. Azerbaijan also held talks with Germany on expanding economic, energy and technology cooperation. Energy Markets: Azeri Light fell 1.8% a barrel, to $130.81.

Middle Corridor: Azerbaijan Railways received 416 block trains from China in January–September, up 40% year on year, strengthening the country’s role in Eurasian trade. Regional Trade: Azerbaijan’s trade turnover with Central Asia grew more than 50% last year, as leaders discussed expanding transport and economic links. Business Ties: President Ilham Aliyev and Pakistan’s Prime Minister Shehbaz Sharif agreed to turn close political relations into stronger economic, investment and commercial cooperation. Azerbaijan also explored agricultural cooperation with Chinese companies. Economic Indicators: Fixed-capital investment rose 10.9%, while the state budget recorded a AZN 2.33 billion surplus in the first nine months. Cotton exports increased 23.3% in January–August, and a new fertilizer plant is targeting exports worth four times its domestic market. Energy & Infrastructure: AIIB approved a $45 million loan for Azerbaijan’s seawater desalination project and backed the Caspian Green Energy Corridor with a $1 million grant.

Investment: Azerbaijan’s fixed-capital investment rose 10.9% to AZN 14.69 billion in January–September. The non-oil and gas sector drew 66.8% of the total, though its investment growth was more modest at 3.1%. Trade and Industry: Cotton export earnings climbed 23.3% to $187.93 million in January–August. A new Sumgait fertilizer plant, due to open in November, is designed to produce 40,000 tonnes a year, with 30,000 tonnes earmarked for export from 2027. Regional Partnerships: President Ilham Aliyev and Pakistan’s Prime Minister Shehbaz Sharif agreed to expand economic, trade and investment ties; Azerbaijan also offered help to extend Pakistan’s ASAN service model. In China, Agriculture Minister Majnun Mammadov explored cooperation with agricultural technology firm DBN Group. Connectivity and Energy: Türkiye opened a 153-kilometre railway section near Bulgaria, expected to improve freight capacity on the Middle Corridor linking Europe with Azerbaijan and Central Asia. Wood Mackenzie says Azerbaijan’s export infrastructure gives it a strategic edge in getting Caspian oil and gas to global markets.