Baku: Economic growth across the Commonwealth of Independent States (CIS) and Georgia is expected to moderate in 2026, as reported by the UN, APA-Economics reports. Regional GDP, which experienced a growth rate of 2.4 percent in 2025, is projected to expand by a slightly lower rate of 2.1 percent in 2026. Factors contributing to this moderated growth include the ongoing war in Ukraine and the Middle East conflict, both of which have introduced further uncertainty to the region by disrupting trade logistics.

According to Azeri-Press News Agency, preliminary data indicates that the Russian Federation's economy contracted in the first quarter of 2026, with full-year growth projected at 1.0 percent. While the country is expected to benefit from stronger export earnings from hydrocarbons, fertilizers, and agricultural products, these gains are anticipated to be partially offset by structural constraints such as labor shortages, sluggish productivity growth, and subdued non-military investment.

In Ukraine, the economy is anticipated to expand by 1.7 percent in 2026. This growth is constrained by significant damage to power generation and infrastructure, necessitating continued international financial assistance. Estimates for post-conflict reconstruction costs have been revised upwards to $588 billion, underscoring the scale of the challenge ahead.

Most countries in the Caucasus and Central Asia are projected to expand at rates above the regional average, driven by exports and domestic growth factors such as residential and infrastructure investment. However, smaller energy-importing countries may face challenges due to higher costs, which could lead to increased inflation, constraints on private consumption, and pressures on fiscal and current account balances. These countries also have limited policy space to manage these economic pressures.