BAKU, Azerbaijan, July 17. Economic engagement between Azerbaijan and Armenia is improving connectivity in the South Caucasus, says Moody’s.
“Growing economic engagement between Azerbaijan and Armenia, progress on regional transport corridors, and continued international backing for the peace process are gradually improving regional connectivity and reducing geopolitical risks despite the absence of a formally ratified peace treaty,” the rating agency said in its latest report.
Moreover, Moody’s analysts point out that Azerbaijan's fiscal strength reflects a commitment to medium-term non-oil fiscal consolidation, which has led to the narrowing of the non-oil primary deficit through stronger non-oil revenue mobilization and more moderate expenditure growth as spending on reconstruction of conflict-affected regions tapers.
“At the same time, Azerbaijan's substantial fiscal buffers managed by SOFAZ continue to grow (reaching 97% of GDP in 2025) and remain among the largest relative to GDP across similarly rated sovereigns. We expect higher oil prices in 2026 to generate windfall gains, through higher hydrocarbon revenues and further accumulation of SOFAZ assets, strengthening the government's shock-absorption capacity and preserving ample fiscal flexibility. Meanwhile, geopolitical dynamics have become more supportive,” the report reads.
The data from the State Customs Committee of Azerbaijan reveals that Azerbaijan exported goods worth $17.129 million to Armenia in January-June 2026.
Meanwhile, more than 36,000 metric tons of grain, nearly 8,000 metric tons of fertilizer, 1,136 metric tons of propane, 133 metric tons of aluminum and 414 metric tons of anthracite have been transported from Russia to Armenia through Azerbaijan.
