Baku: “Trade tensions observed since April have created significant uncertainty. However, the direct impact of US tariffs on South Caucasus countries will remain limited,” said Thanos Arvanitis, Deputy Director of the IMF’s Middle East and Central Asia Department, APA reports.

According to Azeri-Press News Agency, the region’s export volume to the US is relatively small, and energy resources, such as oil and gas, are excluded from the tariffs. This exclusion means that exports to the US from these countries, excluding oil and gas, are extremely low, and the 10% base tariff will not significantly affect regional economies.

Despite the limited direct impact, Arvanitis pointed out that countries should consider three main channels of potential consequences. He noted that trade tensions could impact global growth, affecting key trading partners of South Caucasus and Central Asia. Slower growth in those partner countries would, in turn, reflect on regional economies.

The second channel identified by Arvanitis is financial volatility. He explained that markets remain unstable, and one risk to monitor is the rising borrowing costs. Debt spreads have widened for emerging markets, including this region, leading to increased uncertainty that will affect these countries through financial markets.

Commodity price fluctuations form the third channel, according to Arvanitis. He highlighted that oil prices have dropped by about 15% since early this year, which will affect countries differently depending on whether they are oil importers or exporters. While importers may benefit, exporters will face challenges. Conversely, gold prices have reached historic highs, benefiting gold-producing countries like Uzbekistan and others in the region.

Arvanitis concluded by mentioning that trade negotiations are ongoing, with discussions being held to reduce uncertainty and seek more stable, long-term solutions.