BAKU, Azerbaijan, October 30. Economic activity across the Caucasus and Central Asia (CCA) has remained resilient in 2025 despite a challenging global environment marked by high uncertainty, Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), said during an online briefing, Trend reports.
"In 2025, economic activity across the Caucasus and Central Asia has remained resilient despite a challenging global environment that was marked by high uncertainty," Azour said. He projected that real GDP growth in 2025 will remain robust at 5.6 percent, an upward revision of 0.7 percentage points compared to the IMF’s May forecast.
"This performance reflects a solid domestic demand driven by credit expansion and hydrocarbon exports," he added. Looking ahead, Azour noted that growth is expected to gradually moderate to about 4 percent over the medium term, as hydrocarbon production in oil-exporting countries slows and domestic demand pressures ease.
Inflation has accelerated across most economies in the region during 2025. "This has been driven by domestic pressures, imported inflation, particularly from Russia, and reforms such as electricity tariffs in certain countries," Azour said. He expects inflation to moderate as these factors subside and as tight monetary policies remain in place.
Beyond economic indicators, Azour highlighted that recent political developments offer a note of cautious optimism for the region.
However, the outlook is subject to significant risks. "Although high global uncertainty has not yet adversely affected the CCA economies, a negative impact cannot be ruled out," he warned. Fiscal concerns and higher-than-expected inflation in some advanced economies could tighten global financial conditions. Additionally, volatility in commodity prices, particularly oil and gas, could affect fiscal and external balances, especially in oil-exporting countries.
The ongoing war in Ukraine also continues to pose risks to the region. "The CCA region remains vulnerable to the ongoing war in Ukraine, with risks closely tied to the timing and the nature of any eventual peace agreement, its broader geopolitical implications, and complex spillover effects," Azour said.