FEATURES OF SOCİO-ECONOMİC REFORMS İN AZERBAİJAN İN 2022–2026, STATİSTİCAL İNDİCATORS AND PROBLEMS ENCOUNTERED

Abstract

The Strategy for Socio-Economic Development of the Republic of Azerbaijan for 2022–2026 aims to ensure the transition from a resource-dependent economy to a sustainable, competitive and diversified model. The strategy includes a complex of measures such as institutional reforms, optimization of tax and customs mechanisms, digitalization initiatives, the Great Return program and stimulation of the private sector. In 2025, GDP grew by 1.4 percent, and the non-oil and gas sector recorded an increase of 2.7 percent. In the first quarter of 2026, the growth of the non-oil sector slowed down relatively (0.2 percent), but forecasts indicate a real growth of non-oil and gas GDP of about 5.0 percent by the end of the year and total GDP reaching 134.1 billion manat.
The study estimates the potential growth of the non-oil sector based on the empirical application of the Cobb-Douglas production function (Y = A·K^α·L^β). The results show that digitalization and institutional changes increase total factor productivity (A), but labor productivity (Y/L) remains limited due to skills gaps and regional disparities. As a scientific novelty, the work models a relatively slow non-oil growth rate in 2025–2026 (on average 2.3–5.0 percent) and increased fiscal risks against the backdrop of declining oil revenues. Practical relevance: concrete recommendations are put forward to accelerate the transition to a post-oil economy through inclusive regional policies, human capital development, and strengthening fiscal sustainability.