Decarbonisation will undermine growth in Azerbaijan

Significance The global energy transition is adding urgency to Baku's search for new sources of growth. Progress in economic diversification has been slow, but new opportunities have opened. In the meantime, Baku has made slow progress in becoming a significant gas supplier to Europe while seeking to increase its role as a transportation route. Impacts Faster economic diversification will require changes in governance and a more dynamic private sector. Strengthening the role of Azerbaijan as a transit hub will depend on regional collaboration. Advances in financial development are increasing resilience and will make monetary policy more effective.