Middle Corridor Drives Benefits Beyond Core Economies, Says Moody's

(MENAFN- Trend News Agency) BAKU, Azerbaijan, September 12. Rising traction across the Middle Corridor has brought about positive spillovers beyond core economies along the route (i.e. Kazakhstan, Azerbaijan and Georgia), with others like Uzbekistan and Kyrgyz Republic benefiting through linkages to the corridor, Trend reports via Moody's.

“The Middle Corridor emerged as an alternative, particularly for trade flows between China and Europe. While its multimodal nature brings difficulties, its more direct route provides time and cost benefits. Most of it is rail freight – faster, more reliable and potentially more environmentally friendly than sea transport. As a result, transit volumes have surged since 2022 and trade flows across the region have increased,” reads the report released by Moody's.

The rating agency's experts note that infrastructure investments such as increasing track capacity, upgrading and expanding existing sea vessel fleets and freight trains, and expanding or building new ports/logistical centres have increased accordingly.

“While domestic investments by respective governments and state-owned enterprises account for most of it, foreign entities including international financial institutions like the World Bank (IBRD, Aaa stable), the Asian Development Bank (Aaa stable) and the European Bank for Reconstruction and Development (EBRD, Aaa stable) have also helped finance projects. The Middle Corridor is also part of the EU's (Aaa stable) Global Gateway strategy to improve connectivity between Asia and Europe,” the report reads.

Moody's notes that still, there are obstacles to overcome to realise the Middle Corridor's full potential.

“Besides its infrastructure investment needs, the corridor spans multiple jurisdictions. Harmonising border and custom procedures will require close partnership between countries along the route. Progress in this area will make the route more attractive, helping boost the credit quality of the entities we rate across the region,” the report reveals.

The Middle Corridor is a transport and trade route that passes through several countries in the region, connecting Asia with Europe. It serves as an alternative to the traditional Northern and Southern corridors.

The route begins in China and goes through Central Asian countries such as Kazakhstan, Uzbekistan, and Turkmenistan. It then crosses the Caspian Sea, Azerbaijan, Georgia, and Türkiye before reaching Europe. The Middle Corridor is a land-based route that bypasses longer maritime paths, linking the eastern parts of Asia, including China, with Europe.

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