BAKU, Azerbaijan, September 14. Azerbaijan-Armenia normalization will boost trade in the Caucasus region, Moody’s said in a report obtained by Trend.
“The most significant positive geopolitical development is the continuing normalization of relations between Armenia and Azerbaijan. A more durable settlement would support regional stability, improve connectivity and create new opportunities for trade and transport links across the Caucasus,” reads the report.
On October 21, 2025, President of Azerbaijan Ilham Aliyev announced that Azerbaijan had lifted all restrictions on cargo transit to Armenia that had been in place since the occupation.
The first cargo to transit the new route was grain from Kazakhstan. Since then, various products have been regularly shipped to Armenia from Kazakhstan and Russia through Azerbaijan, as well as from Azerbaijan.
To date, Azerbaijan has exported nearly 17,000 tonnes of diesel fuel and around 5,000 tonnes of RON-92 and RON-95 gasoline to Armenia to date.
Moreover, nearly 60,000 tonnes of grain, more than 9,000 tonnes of fertilizer, 1,414 tonnes of propane, 133 tonnes of aluminum, 1,114 tonnes of coal and 608 tonnes of timber have been delivered from Russia to Armenia through Azerbaijan.
Moody’s believes that political and geopolitical risks will remain a key constraint on creditworthiness in the Central Asia and Caucasus region, even as resilience continues to improve.
“The war in Ukraine remains the dominant geopolitical risk, weighing directly on Ukraine and Belarus and indirectly on the wider region through trade, remittance, energy and confidence channels,” said the rating agency analysts.
At the same time, Moody’s notes that many sovereigns have strengthened their capacity to deal with geopolitical shocks.
“Central Asian economies continue to broaden economic links with the EU, China, Türkiye and the Gulf countries. Trade diversification, stronger external buffers and greater regional cooperation have reduced vulnerability to external shocks and improved policy flexibility. Continued investment in transport, energy and digital connectivity is also creating alternative channels for trade and growth beyond traditional Russia-centered routes,” the report says.
Moreover, Moody’s notes that the conflict in the Middle East represents a secondary geopolitical risk for the region, with credit implications likely to materialize through energy, food and transport prices rather than direct trade or financial channels.
“Energy-importing sovereigns, particularly Moldova and some Western Balkan economies, remain more exposed to these issues, while higher energy prices support fiscal and external balances in exporters such as Kazakhstan and Azerbaijan. Overall, stronger policy frameworks, improved resilience and continued economic diversification will help contain these risks and support improving credit fundamentals across most sovereigns,” the report says.
