S&P reveals the economic effects of a potential Russia-Ukraine deal on Azerbaijan
S&P Global Ratings notes a high degree of uncertainty about the extent, outcome, and consequences of the Russia-Ukraine war, News.Az reports.
"We view an immediate and significant outflow of migrants, investments, and capital from Central Asia and the Caucasus as unlikely, following a potential ceasefire. This should limit economic volatility.
Positive growth effects are likely to persist albeit at moderated levels. The arrival of migrants and visitors to Central Asia and the Caucasus, along with business relocations, boosted sectors such as information and communications technology (ICT), logistics, financial services, hospitality, and trade. For example, several thousand businesses owned by Russian citizens have been registered in Georgia since 2022. In Kazakhstan, the number of Russian companies in the ICT sector grew sevenfold compared to 2021, and make up 75% of the sector as of early 2024, according to Halyk Finance. In a ceasefire scenario, we expect many businesses would continue to operate abroad given the likely prolonged geopolitical uncertainty and enduring political and economic ties between Russia and its immediate neighbors.
Our current economic growth forecasts already somewhat capture the normalization of growth from the highs of 2022. We expect real GDP growth will moderate in the Caucasus and Central Asia in 2025-2027, relative to 2022-2024, as the temporary surge in trade, remittances, and capital inflows from Russia stabilizes. We expect Georgia and Armenia's growth will almost halve over the next three years, from 9.4% and 8.8%, respectively, during 2022-2024, but will remain solid."
It should be noted that S&P forecasted Azerbaijan's real economic growth to be at 2% in 2025-2027.
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