Economic overview

Azerbaijan is strategically located in the South Caucasus, between the Black and Caspian Seas, serving as a key gateway between Europe and Asia. Its geographic position provides significant transit and logistics potential. Ongoing investments in transport infrastructure, including roads, ports, and rail networks, are reinforcing Azerbaijan’s role as a regional logistics hub along the so-called 'Middle Corridor'.

Azerbaijan’s economy remains strongly influenced by the oil and gas sector, while steadily advancing its diversification strategy. Although value added in the oil and gas sector declined by 1.6%, the non-oil sector demonstrated solid growth of 2.7%, reflecting ongoing structural transformation. 

In 2025, Azerbaijan’s Gross Domestic Product (GDP) reached USD 75.9 billion, representing a 1.4% real increase compared to the previous year. GDP per capita stood at USD 7,413. 

Azerbaijan is currently undergoing dynamic economic modernization. Strategic priorities include: 

• Expanding renewable energy capacity 
• Strengthening transport and logistics infrastructure 
• Modernizing agriculture and water management 
• Advancing digital transformation 
• Supporting industrial development 
   

By 2030, renewable energy is expected to account for 30% of the national energy mix, reinforcing the country’s commitment to sustainable development and energy diversification. 

• Gross Domestic Product (2025): USD 75,9 billion
• GDP per capita (2025): USD 7413
• Economic Growth (2025): 1.4% (real change from previous year) 
• Sectoral Dynamics (2025) 
  - Oil and gas sector: –1.6% 
  - Non-oil and gas sector: +2.7% 

GDP by Sector 

In January-November 2025 legal and natural entities of the Republic of Azerbaijan realized trade operations with their partners in 177 countries of the world, goods were exported to 126 countries and imported from 170 countries.

Taking into account value of statistically estimated exported crude oil and natural gas registered in the customs agencies but customs formalities of which not completed, the foreign trade turnover of the country in January-November 2025 made USD 43830,5 million. USD 22642,2 million or 51,7% of trade turnover made the export value, USD 21188,3 million (48,3%) – import value, and consequently positive trade balance amounted to USD 1453,9 million. In comparison with January-November 2024, foreign trade turnover increased in actual prices by 2,4% and decreased in real terms - 9,2%. Import decreased in real terms by 10,4%, export by 8,3%.

In January-November 2025 the export of non-oil-gas products made USD 3317,0 million and compared to January-November 2024 it increased by 7,3% in actual prices and decreased by 17,9% in real terms.

According to the State Customs Committee data, 25,2% of foreign trade turnover of the country was with Italy, 11,7 – Türkiye, 10,1% – Russia, 9,5% – China, 3,1% - USA, 2,9% - Germany, 2,3% - United Kingdom, 2,0% each with  2,2% Australia and Switzerland, 1,8% - Czech Republic, 1,7% each with – Bulgaria, Greece and Georgia, 1,5% each with Croatia and Romania, 1,4% - Kazakhstan, 1,3% - Iran, 1,1% each Uzbekistan and Ukraine, 1,0% - Portugal, 0,9% - France, 0,8% each with Belarus and India, 12,9% of the trade operations were with other countries.

The European Union remains Azerbaijan’s most important trading partner, with Italy continuing to be the leading destination. 

Top trade partners (January–November 2025): 

• Italy: 25.2% 
• Türkiye: 11.7% 
• Russia: 10.1% 
• China: 9.5% 
• Germany: 2.9% 
   

Italy remains Azerbaijan’s largest trade partner, while Türkiye and Russia continue to play significant roles. Germany maintains its position among the important European partners. 

Economic relations between Germany and Azerbaijan are stable and offer further potential for development.
 

Trade Summary (January – November 2025)

• Total Exports from Germany to Azerbaijan: USD 636.28 million 
• Total Imports from Azerbaijan to Germany: USD 921.79 million 
• Total Turnover: USD 1.56 billion 

German exports to Azerbaijan continue to consist mainly of machinery, motor vehicles and automotive parts, as well as industrial equipment.

German imports from Azerbaijan are still predominantly dominated by crude oil and petroleum products.

Germany therefore remains an important European economic partner for Azerbaijan, particularly in the fields of industrial equipment, technology, and energy trade.

In 2025, Azerbaijan further consolidated its role as an important energy supplier to Europe. The country exported approximately 25.2 billion cubic meters (bcm) of natural gas, of which around 12.8 bcm were delivered to European customers.

Azerbaijan continues to supply natural gas to a wide range of European countries, including Bulgaria, Croatia, Greece, Hungary, Italy, North Macedonia, Romania, Serbia, Slovakia, and Slovenia, and since 2026 also Germany and Austria. With these additions, the total number of European recipient countries has increased to 16.

Italy remains one of the most important markets for Azerbaijani gas. A significant share of exports to Europe is transported via the Trans Adriatic Pipeline (TAP) to Italy.

Since January 2026, the State Oil Company of the Azerbaijan Republic (SOCAR) has started supplying natural gas to Germany and Austria for the first time. The deliveries are carried out via TAP, with the gas initially arriving in Italy and then being transported onward through the existing European gas network. This development expands Azerbaijan’s geographical reach in Europe and strengthens its role in ensuring European energy security.

Azerbaijan offers attractive market opportunities, particularly in energy and energy infrastructure, logistics and transit, construction and infrastructure, agriculture and food processing, as well as renewable energy. The government supports investments through targeted incentive programs and clearly defined development plans for strategic sectors.

Challenges remain in administrative processes, transparency, and regulatory stability. Its OECD risk rating of 4 out of 7 indicates a moderate country risk, typical for fast-growing transformation markets. At the same time, Azerbaijan is a resource-rich country with a strategic location, increasing logistical significance, and visible reform progress. For German companies, there are notable opportunities in infrastructure, energy, logistics, mechanical engineering, industry, and renewable energy.

Azerbaijan is actively expanding its renewable energy sector as part of a broader economic transformation agenda focused on diversification and decarbonization. The government is supporting solar and wind energy projects, alongside initiatives to improve energy efficiency.

By 2030, around 30% of the national energy mix is expected to come from renewable sources. At the same time, Azerbaijan is investing in the modernization of infrastructure, agriculture, water management, digitalization, and industry, aiming to combine economic growth with sustainability.

These developments present attractive market opportunities for German companies, particularly in renewable energy, energy infrastructure, environmental technology, and industrial efficiency solutions.

In addition to significant oil and gas reserves in the Caspian Basin, Azerbaijan possesses a range of other mineral and natural resources, including iron ore, copper, gold, bauxite, and various construction materials. This resource base supports the development of industry, construction, and basic materials processing.

Fertile agricultural regions and diverse climatic zones provide strong conditions for agricultural production and food processing. At the same time, the country holds considerable potential for renewable energy, particularly in wind and solar power.

Azerbaijan’s population is relatively young and increasingly urbanized, with economic activity concentrated around the Baku metropolitan area. The country’s geographic diversity - from the Caspian Sea to the Caucasus Mountains - offers numerous opportunities for energy, infrastructure, industrial, and agricultural projects, supporting its broader economic diversification agenda.

In 2025, industrial enterprises and individual entrepreneurs produced USD 37,1 billion worth of industrial products, a 1.0 % decrease compared to 2024.  

Mining and quarrying accounted for 59.6 % of total industrial output, while the manufacturing sector made up 33.9 %.  

The oil and gas sector’s output fell by 2.0 %, whereas the non-oil sector increased by 5.5 %, highlighting continued growth in diversified industrial areas.  

Within manufacturing, significant increases were seen in sectors such as: 

• Pharmaceuticals (+86.3 %) 
• Wood products (+57.0 %) 
• Textiles (+24.5 %) 
• Oil products (+13.7 %) 
• Food products (+9.1 %): Meanwhile, declines occurred in areas like motor vehicles, electrical equipment, and furniture.  
   

Production in the electricity, gas and steam sector rose modestly by 0.3 %, and water supply/waste management grew by 2.5 %. 

• GDP growth: +1.4% in 2025 
• Consumer price index (CPI): +5.2% compared to 2024 
  - Food products: +6.4% 
  - Non-food products: +2.5% 
  - Services: +5.7% 
• Retail trade turnover: +3.8% year-on-year 
• Foreign trade turnover (Jan–Nov 2025): USD 43.83 billion 
• Average monthly salary: USD 640,7 
• Industrial production: USD 37,1 billion 
• Fixed capital investments: USD 12,4 billion 
   

Overall, Azerbaijan’s economy in 2025 showed moderate growth, increasing trade activity, and continued investment despite rising consumer prices.