Baku: In 2025, employment growth in Azerbaijan was predominantly driven by the private sector, with the creation of 75,000-80,000 new jobs throughout the year, as highlighted by Wael Mansour, the World Bank's Lead Economist for the South Caucasus. This announcement was made during the presentation of the "Azerbaijan Country Economic Memorandum - Spring 2026" report in Baku.

According to Azeri-Press News Agency, Mansour emphasized that the private sector was the key contributor to job creation, which consequently led to a decrease in the unemployment rate from 5.3% in 2024 to 5.2% in 2025. The labor market demonstrated positive dynamics amidst these developments.

Mansour pointed out that the primary factors for the weakening domestic demand in Azerbaijan during 2025 were attributed to a decline in public investment and reduced private consumption. He noted that a significant reduction in public investment, as part of fiscal consolidation efforts, adversely affected economic activity in the construction and related sectors, despite government spending having been a significant driver of economic activity in the non-oil sector for many years.

The chief economist explained that the slowdown in private consumption was a result of slower wage growth and more stringent conditions for consumer lending compared to 2024. This led to households being more cautious with their expenditures.

Mansour also highlighted that Azerbaijan's economic growth slowed to 1.4% in 2025, primarily due to a decrease in hydrocarbon production and weaker domestic demand. Despite these challenges, macroeconomic stability was maintained, with low public debt, high strategic reserves, and a resilient banking sector.

He further noted that although the current account surplus and the budget surplus declined amid reduced hydrocarbon revenues, they remained positive. With public debt at approximately 20% of GDP, the government retains significant fiscal space to respond flexibly to future external shocks and invest in diversifying the economy.