Baku: S and P Global Ratings has disclosed the potential economic impacts of a possible Russia-Ukraine agreement on Azerbaijan and the surrounding region, with a significant focus on Central Asia and the Caucasus. According to APA reports, the agency highlights the uncertainty surrounding the extent, outcome, and consequences of the ongoing conflict.

According to Azeri-Press News Agency, S and P Global Ratings does not anticipate an immediate significant outflow of migrants, investments, and capital from Central Asia and the Caucasus following a potential ceasefire. This expectation should help limit economic volatility in the region. Positive growth effects, although at moderated levels, are expected to persist. The influx of migrants and business relocations has boosted key sectors such as information and communications technology (ICT), logistics, financial services, hospitality, and trade. Notably, several thousand businesses owned by Russian citizens have registered in Georgia since 2022. In Kazakhstan, Russian companies in the ICT sector have increased sevenfold since 2021, comprising 75% of the sector by early 2024, as reported by Halyk Finance.

The agency’s current economic growth forecasts already account for the normalization of growth from the highs of 2022. It projects that real GDP growth will moderate in the Caucasus and Central Asia from 2025 to 2027, compared to 2022-2024, as the temporary surge in trade, remittances, and capital inflows from Russia stabilizes. Specifically, the growth rates for Georgia and Armenia are expected to nearly halve over the next three years, from 9.4% and 8.8%, respectively, during 2022-2024, though they will remain solid.

S and P forecasted Azerbaijan’s real economic growth to be at 2% in 2025-2027, reflecting a stabilization in the region’s economic activities following the initial impacts of the conflict and subsequent adjustments.