IMF: Inflation Remains Biggest Threat To Economic Stability In Caucasus And Central Asia

(MENAFN- Trend News Agency) BAKU, Azerbaijan, November 13. Inflation remains the main challenge to macroeconomic stability across the Caucasus and Central Asia, while bringing it down further requires consistent policy measures, particularly in the area of monetary policy, Roberto Cardarelli, Assistant Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), said.

He made the remarks at the IMF media roundtable on the November 2026 Regional Economic Outlook for the Caucasus and Central Asia.

"For us, there is no doubt that the main macroeconomic stability issue for the region is inflation," he said.

According to Cardarelli, inflationary pressures stem from both domestic and external factors. In particular, strong domestic demand growth, running above sustainable levels, is creating additional price pressures. External shocks have also contributed to inflation.

He emphasized the importance of monetary policy in bringing inflation back to target levels. While reducing inflation from high, double-digit levels can be relatively straightforward, bringing it down further becomes increasingly difficult, he noted.

"Bringing inflation down from high, double-digit levels to below 10 percent is easy. But bringing it down further is complicated. It is like losing weight: the first few kilos are easy to shed, but the next ones are much harder. Still, there is no other way around it," Cardarelli said.

Commenting on the methodology behind the IMF's regional economic outlook, he explained that its main section focuses on recent economic developments and projections for the next five years. The October edition, in particular, examines developments since the previous report was released in April.

Longer-term data, meanwhile, are used primarily in the analytical chapters, which examine structural changes across the region. This approach allows the IMF to assess, among other things, how the impact of energy shocks on inflation has changed over time and how countries have progressed in diversifying their trade.

Cardarelli also noted that the purpose of the regional outlook is not to provide an in-depth analysis of each individual country, but rather to identify common trends and factors shaping economies across the region.

"We try to bring countries together and compare them to identify common trends and common factors. I think there is something to learn from looking at countries that are very different from one another," he explained.

Among these common factors, he highlighted the development of connectivity, the Middle Corridor and changes in global trade flows.

MENAFN13112026000187011040ID1111956522