Baku: Armenia and Azerbaijan are experiencing economic benefits as expectations of reduced regional foreign policy risks come into play, APA-Economics reports.
According to Azeri-Press News Agency, the largest banking group in the Netherlands, ING Group, has assessed that despite global pressures, the economies of the CIS-4 countries remain resilient. Armenia and Azerbaijan are particularly benefiting from these expectations of decreased regional foreign policy risks, while economic activity in Kazakhstan and Uzbekistan is increasing at a faster pace than anticipated.
ING Group notes that the easing of monetary policy has been halted in all countries except for Azerbaijan, where the process continues due to persistent inflation risks. However, Azerbaijan’s economy is projected to face challenges in 2025, with a GDP decrease of 2.3% recorded in July, contrasting with a 1.5% growth in the first half of the year. Despite this, retail lending remains high, although the budget surplus has declined to 2.6% of GDP.
In response to economic dynamics, the Central Bank of Azerbaijan lowered the interest rate to 7.00% in July and maintained it in September, focusing on currency market movements. The manat’s exchange rate remains fixed at 1.70/USD, with forecasts indicating stability at this level through 2025.
In a positive development, Moody’s upgraded Azerbaijan’s credit rating to investment grade in July, citing increased financial reserves and improved relations with Armenia. Nonetheless, the decline in the trade surplus, from 5.5 billion USD in 2024 to 1.8 billion USD in 2025, poses a significant risk to the country’s economy, particularly if oil prices remain weak.