Azerbaijan's potential as a transport and logistics hub may create additional opportunities for economic diversification, Report informs referring to Moody's Ratings.
"Our assessment of Azerbaijan's economic strength reflects its solid growth prospects in the next 12-18 months, against its significant exposure to the oil and gas sector. The country's rising potential as a transport and logistics hub along the Middle Corridor, coupled with the ongoing development of previously conflicted regions, supports economic prospects and could offer further diversification benefits in the longer run.
We expect Azerbaijan's real GDP to moderate to 1.5% in 2025, down from 4.1% in 2024, driven by base effects with downside risks stemming from a weaker external outlook amid global trade uncertainties and geopolitical volatility.
Looking ahead, we expect non-oil growth to be supported by expanding capacities and activity in the transport and logistics sector, with key transport routes such as the Trans-Caspian International Transport Route attracting substantial investment and generating positive spillovers across the broader economy.
Reconstruction efforts in the Karabakh and East Zangezur regions are also contributing to growth through large-scale capital investments and construction activity.
In parallel, the government's push into renewables has drawn foreign investment into wind and solar projects, with potential for future export revenues from clean energy," reads the update.
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