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Akbar Novruz

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Against the backdrop of rising global oil prices linked to tensions around the Strait of Hormuz, Azerbaijan’s current account surplus could reach 9–10 percent of GDP in 2026, according to a new assessment by ING Group, the Netherlands’ largest banking group, AzerNEWS reports.

The report states that rising commodity prices and strong inflows of portfolio investments are strengthening the external financial buffers of hydrocarbon-exporting CIS-4 countries, Azerbaijan, Armenia, Kazakhstan, and Uzbekistan, while also supporting regional currencies.

According to ING analysts, ongoing tensions in the Middle East and risks surrounding the Strait of Hormuz have reinforced high raw material prices. In response, the bank raised its 2026 oil price forecast by $4, bringing the projected average to $93 per barrel.

ING noted that Azerbaijan and Kazakhstan are expected to be the primary beneficiaries of the new oil price environment, while the outlook for Uzbekistan and Armenia appears more balanced.

“In the new oil price scenario, Azerbaijan’s current account surplus could reach 9–10 percent of GDP this year, while the consolidated budget surplus could reach 4 percent of GDP,” the report said.

The bank also pointed to growing inflationary pressure across the CIS-4 region due to global economic conditions, although analysts believe tighter monetary policy is unlikely to significantly weaken economic activity.

ING highlighted strong portfolio investment inflows as a key positive factor supporting regional currencies in the short and medium term, while warning that reliance on such flows could pose long-term risks.

“Financial investors, unlike strategic foreign direct investors, can react quickly and unpredictably during periods of instability,” ING experts noted.

According to the report, Azerbaijan faces inflation risks mainly through imported inflation linked to trade relations with the European Union, China, and other partners. However, domestic inflationary pressure remains relatively weak due to moderate GDP growth.

The analysts also referenced the revised forecasts of the Central Bank of Azerbaijan, which significantly upgraded its projection for Azerbaijan’s current account surplus for 2026 to $5.5 billion in its May estimate. In February, the forecast had stood at $2.8–3 billion.

For comparison, Azerbaijan’s current account surplus totaled $3.5 billion in 2025, equivalent to 4.6 percent of GDP.