Azerbaijan’s Ministry of Economy has projected steady economic growth of 3-4% annually through 2026 under the “Socio-Economic Development Strategy for 2022-2026,” a cornerstone of Baku’s renewed push to diversify and modernize the economy. Central to this blueprint is a notable expansion in the non-oil and gas sectors, anticipated to grow at an average rate of 5% each year.
Huseyn Huseynov, head of the economic department at the Ministry, detailed the strategy’s targets at a seminar on "Green Climate Finance and Carbon Pricing Policy," underscoring the government’s intent to recalibrate the economy away from hydrocarbons. By 2026, the private sector’s contribution to Azerbaijan’s GDP is expected to climb to 88%, marking a substantial shift from state-led growth.
However, the strategy goes beyond economic rebalancing, ambitiously aligning itself with sustainability and climate resilience. Among its environmental goals, the initiative aims to increase the nation’s green coverage from 12% to 12.3%, rehabilitate previously unusable land by lowering its proportion from 25% to 15%, and bolster waste recycling efforts to cover 20% of waste nationally, with regional rates targeted at 10%.
These goals are part of a broader framework to mitigate climate impacts, including measures to foster the use of eco-friendly transport options and incentivize green technology adoption. The government has committed to increasing renewable energy’s share within the total energy mix, aiming for a 24% share in the electricity generation capacity by 2026. This focus on green energy could serve as a critical step toward reducing Azerbaijan’s environmental footprint, especially as international pressure mounts on oil and gas exporters to demonstrate environmental accountability.
Huseynov’s statements reflect a strategic alignment with global green finance and carbon reduction goals, a move that may attract investment interest from environmentally focused funds and development banks. These reforms, though substantial, come with considerable challenges, especially given Azerbaijan’s traditional reliance on oil revenues. Yet, if successful, they could propel the country toward a more resilient and diversified economy.
Economics
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A detailed review of legislative norms and e-government services across various business environment domains has been prepared and published by the working group of the Business Environment and International Ratings Commission, focusing on electricity network connections.
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The draft law "On Amendments to the Tax Code," adopted in its third reading, provides for tax exemptions on the sale of locally manufactured buses in Azerbaijan and the supply of spare parts for these vehicles. This was reported by the Tax Service under the Ministry of Economy, explaining that the government's initiative aims to support business development in the country by reducing the tax burden. The exemption will come into effect on January 1, 2025, and will remain valid for eight years.
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On 21 December, Russian Transport Minister Roman Starovoit met with Azerbaijani Minister of Digital Development and Transport Rashad Nabiyev at the Russian Ministry of Transport.
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Hundreds of trucks are stuck in the Kazakh port of Kuryk, facing delays for several days while waiting for ferry transport to Azerbaijan, the Azakhstan portal reports lada.kz. The backlog is due to a combination of reduced ferry availability, adverse weather conditions, and an influx of cargo rerouted because of expanded sanctions on Russia.
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