Azerbaijan and Kazakhstan are expected to continue implementing fiscal consolidation policies in 2026, with Azerbaijan projected to maintain this approach beyond next year, according to the International Monetary Fund (IMF).
The assessment was published in the IMF's October Regional Economic Outlook for the Middle East and Central Asia, titled Navigating Amid Uncertainty: Strengthening Resilience in Challenging Times.
"It is projected that Azerbaijan and Kazakhstan will maintain their fiscal consolidation trajectory in 2026, with Azerbaijan expected to continue this course beyond 2026. Meanwhile, in most oil-importing countries across the Caucasus and Central Asia—with the exception of Armenia—fiscal policy is projected to become more stimulatory in 2026, before shifting toward a more restrictive stance in 2027–2028," the report states.
The Fund's projections indicate that Azerbaijan will maintain a comparatively restrained fiscal policy while economic growth remains moderate over the coming years.
According to the IMF, Azerbaijan's real gross domestic product (GDP) is expected to expand by 1.7% in 2026, followed by 2.3% growth in 2027.
Looking further ahead, the Fund forecasts real GDP growth of 2.5% in 2031, leaving its long-term projection unchanged from the assessment published in April.
The IMF's near-term forecasts broadly align with the Azerbaijani government's expectations for the current year, although differences remain regarding the pace of economic expansion in 2027.
Azerbaijan's Ministry of Economy projects GDP growth of 1.7% in 2026 and 2.7% in 2027.
Meanwhile, the Central Bank of Azerbaijan has adopted a more cautious outlook for the current year, forecasting economic growth of just 0.5% in 2026 before an acceleration to 2.6% in 2027.
For comparison, Azerbaijan's economy expanded by 1.4% in 2025.
The differing projections suggest that while the IMF, the Ministry of Economy and the Central Bank anticipate stronger economic performance in 2027, they hold varying expectations regarding the extent of the recovery.
The IMF's assessment also highlights contrasting fiscal trends across the Caucasus and Central Asia.
While Azerbaijan and Kazakhstan are expected to pursue fiscal consolidation, most oil-importing economies in the region, excluding Armenia, are projected to adopt more expansionary fiscal policies in 2026 before tightening their fiscal positions in 2027 and 2028.
For Azerbaijan, the Fund expects fiscal consolidation to continue alongside gradual economic growth, with the country's longer-term GDP expansion projected to reach 2.5% by 2031.