Baku

Baku functions as Azerbaijan's economic and political keystone—a capital city that concentrates governance, oil wealth management, and aspirational diversification in a nation where hydrocarbons generate two-thirds of GDP and 90% of export revenue. The State Oil Fund (SOFAZ) held $70.2 billion in assets as of September 2025, up 16.9% year-to-date, representing the accumulated surplus from decades of petroleum extraction. Real GDP grew 4.1% in 2024 (up from 1.4% in 2023) with non-oil sectors expanding 6.1%—construction, ICT, transportation, and tourism concentrated heavily in Greater Baku. FDI reached $4.1 billion in 2024, highest since 2013, with over one-third directed to renewable energy. The government targets 30% renewable electricity capacity by 2030: the 230 MW Garadagh solar plant is operational, the 240 MW Khizi-Absheron wind farm expected online by late 2025, and 760 MW additional solar planned for 2026. Baku's strategic position enables the 'Middle Corridor' connecting Europe and Asia—the Baku International Sea Trade Port and Baku-Tbilisi-Kars railway position the city as a transit hub. Gas exports aim to reach 33 bcm annually by 2030 (up from 25 bcm in 2024) following the $2.9 billion Shah Deniz expansion. Fitch and Moody's upgraded sovereign ratings to BBB-/Baa3 in 2025 citing fiscal discipline. Yet fundamental dependency persists: the capital manages oil wealth rather than having transcended it.