Laman Zeynalova
Deputy Editor-in-Chief Read more
BAKU, Azerbaijan, October 21. The Middle Corridor has reinforced Azerbaijan’s importance as a regional transit hub, says the EU-backed report.
The eighth edition of the EU Business Climate Report Azerbaijan 2025/26, funded by the European Union and prepared by the VM Europe Consortium, provides an updated assessment of Azerbaijan’s economic and business environment from the perspective of European companies operating in the country.
“Transport and logistics have become increasingly prominent in the assessment of Azerbaijan's economic potential. The development of the Trans-Caspian Middle Corridor has reinforced the country's importance as a regional transit hub, and businesses broadly acknowledge the strategic significance of Azerbaijan's investments in rail, port, and customs infrastructure. At the same time, interviewed companies also point to bottlenecks related to corridor efficiency, operational coordination, and logistics costs. Further progress in this area will be essential if Azerbaijan is to fully capitalise on its transit role and strengthen its position in regional and international value chains,” reads the report.
The authors point out that Azerbaijan continues to occupy a strategically important position at the intersection of Europe and Asia, with energy cooperation and transport connectivity remaining central pillars of EU-Azerbaijan relations.
“At the same time, the country is pursuing a broader economic transition aimed at reducing its dependence on hydrocarbons and strengthening the role of the non-oil economy. This process has gained further relevance in light of changing geopolitical conditions, shifting trade routes, and increasing international focus on regional resilience, energy security, and diversified supply chains,” reads the report.
According to the interviewed European companies, Azerbaijan's geographic location, expanding transport infrastructure, and relatively stable operating environment remain among the country's most important assets.
“At the macroeconomic level, Azerbaijan has demonstrated resilience, although growth dynamics have become more moderate and remain influenced by fluctuations in hydrocarbon revenues, public spending patterns, and external developments,” the report says.
The investment climate is generally assessed as satisfactory. European businesses point to positive developments in infrastructure, energy availability, and market accessibility.
The report also highlights the growing importance of sustainability and green transformation on the country's economic agenda.
“Azerbaijan has taken visible steps to promote renewable energy development, improve energy efficiency, and position itself as a future green energy partner. However, according to European businesses, the transition remains at an early stage in many sectors, and stronger incentives, clearer frameworks, and improved access to green finance will be needed to accelerate uptake and create a more enabling environment for sustainable investment,” reads the report.