IMF Sees Baku-Yerevan Peace Deal Boosting Economic Cooperation in CCA Region

A peace agreement between Armenia and Azerbaijan could open the door for increased regional cooperation and integration, according to the International Monetary Fund (IMF).

Fiscal policy in the Central Asia and Caucasus (CCA) region will generally be expansionary in 2025, but is expected to shift to a contractionary stance from 2026, according to the update, The Caspian Post reports citing local media.

This will be facilitated by a reduction in capital expenditures in Azerbaijan and the implementation of fiscal reforms aimed at increasing non-oil revenues in Kazakhstan, the IMF noted.

The main exceptions will be Kyrgyzstan and Tajikistan, where fiscal policy is projected to remain expansionary in the medium term, largely due to rising capital expenditures, the IMF added.

The document also notes that medium-term economic growth in the CCA region may exceed current projections if the positive effects of recent events, primarily related to the aftermath of the conflict in Ukraine and long-term infrastructure investments, prove more persistent than expected.

This, according to the Fund's experts, may boost the potential GDP of the region's countries above the baseline.

The IMF forecasts economic growth in the CCA region at 5.6% this year, 4.7% in 2026, and 4% in 2030. In oil-exporting countries, GDP growth is expected at 4.9% in 2025, 4% in 2026, and 3.1% in 2030.

Economic growth in oil-importing countries is projected at 6.8% in 2025, 5.7% in 2026, and 5.4% in 2030.