IMF Points To Diverging Economic Growth Trends Across Caucasus And Central Asia

(MENAFN- AzerNews) Qabil Ashirov Read more

Economic growth is expected to remain strong across many countries in the Caucasus and Central Asia in 2026, according to the International Monetary Fund's (IMF).

Roberto Cardarelli, Assistant Director of the IMF's Middle East and Central Asia Department, made the remarks on Friday during the presentation of the International Monetary Fund's (IMF) regional economic outlook, titled Caucasus and Central Asia: Navigating Uncertainty.

Cardarelli noted that economic growth remains resilient, particularly in countries across the region that import oil.

He identified two major factors supporting economic activity: strong remittance inflows and sustained growth in real lending.

"Remittance inflows remain high. Another factor is real credit growth. We are talking about growth adjusted for inflation, rather than nominal growth. This indicator remains relatively stable and high in several countries across the region," he said.

Cardarelli also highlighted the inflow of financial and human capital into the region following the outbreak of the Russia-Ukraine war, alongside an increase in remittances. These developments have had a positive impact on regional economies, with their contribution becoming even more pronounced in 2026.

Meanwhile, inflation trends vary considerably across the region. Inflation has declined in Uzbekistan and Kazakhstan, while rising energy costs and supply shocks have accelerated price growth in several other countries.

According to Cardarelli, inflation exceeds target levels in approximately six of the eight countries covered by the IMF's regional assessment. He identified this as one of the key challenges examined in the report.

He explained that differences in monetary policy partly account for the divergent inflation trends. Kazakhstan and Uzbekistan, where inflation has been moderating, have maintained relatively tight monetary policies. By contrast, Kyrgyzstan, which has experienced the sharpest acceleration in inflation, has pursued a more accommodative monetary stance.

Exchange-rate movements have also influenced domestic prices. In several countries, appreciation in nominal effective exchange rates has helped cushion the impact of higher energy costs on domestic inflation.

This effect has been particularly noticeable in Kazakhstan, which has recorded the most significant currency appreciation among the countries examined.

Cardarelli added that the IMF's report also examines the role of subsidies in determining how increases in energy costs are transmitted to domestic prices.

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