The European Bank for Reconstruction and Development's (EBRD's) June 2021 Regional Economic Prospects report predicts 2.0% economic growth for Azerbaijan in 2021 followed by 2.5% in 2022.

The EBRD gave the following summary of the gradual economic recovery in the South Caucasus country:

“The gradual recovery of Azerbaijan’s economy is being driven by sectors other than oil and gas. After being hit by a triple shock—the Covid-19 pandemic, a slump in oil prices and the flare up of the conflict over Nagorno-Karabakh—Azerbaijan’s GDP declined by 4.3 per cent in 2020. A strong contraction in the oil and gas sector of 7.2 per cent was balanced by a softer decline in the rest of the economy, which was helped by the government’s extensive support package.

“Lower oil revenues on the back of the price slump and the production decline under the OPEC+ deal turned external and fiscal surpluses to deficits. However, Azerbaijan’s public debt remained low despite the ensuing gaps as funding needs were met domestically by drawing upon the large assets of the State Oil Fund of Azerbaijan (SOFAZ).

“Non-hydrocarbon sectors started to recover in 2021, posting 4.5 per cent year-on-year growth in the first five months. However, the overall GDP growth, estimated at 0.8 per cent year-on-year in the same period, continues to be weighed down by lower oil and gas production. Rising demand for and price of oil, supported by an expected gradual increase of oil quotas in the coming months, will strengthen the overall economic performance in the second half of 2021.

The economy is forecast to grow by 2.0 per cent in 2021 and 2.5 per cent in 2022. Risks are related to structural weaknesses of the economy, the speed of vaccinations and possible volatility in commodity prices.”