ADB Upgrades Growth Forecast for Caucasus and Central Asia

The Asian Development Bank (ADB) has revised its economic growth forecast upward for countries in the Caucasus and Central Asia, projecting 5.5 per cent growth in 2025 and 5.1 per cent in 2026, according to the latest Asian Development Outlook.

These updated figures mark a slight increase from earlier estimates of 5.4 per cent and 5.0 per cent, respectively, The Caspian Post reports, citing Kazakh media.

The improved forecast is largely attributed to stronger-than-expected government spending in Kazakhstan, particularly on infrastructure and social services. Additionally, the early launch of the Tengiz oil field expansion is expected to significantly boost mining output and industrial activity.

“OPEC+ increased oil production for a third consecutive month as of May 31, 2025, which continues to support Kazakhstan’s growth trajectory as it operates at full production capacity,” the report states.

Inflation on the Rise Across the Region

While the growth outlook has improved, the ADB warns that inflationary pressures are intensifying across the region. The Bank now expects inflation to reach 7.8 per cent in 2025 and 6.7 per cent in 2026, up from previous forecasts of 6.9 per cent and 5.9 per cent, respectively. The upward revision is mainly driven by rising prices in Armenia, Kazakhstan, and the Kyrgyz Republic.

Key Inflation Highlights:

Armenia: Inflation rose sharply from 3 per cent in January to 5.8 per cent in May, compared to just 0.8 per cent during the same period in 2024.

Kazakhstan: Inflation accelerated to 10.1 per cent in May, up from 9.0 per cent, primarily due to higher utility costs, despite tight monetary policies.

Kyrgyz Republic: Inflation reached 8.0 per cent, reflecting the country’s heavy reliance on imported food and energy.

Other regional economies reported milder inflation trends:

Tajikistan: Recorded the lowest inflation rate at 0.1 per cent in May.

Azerbaijan: Saw inflation hit 5.9 per cent from January to May, largely driven by earlier fuel and utility price hikes.

Georgia: Reported annual inflation of 3.5 per cent in May.

Meanwhile, Turkmenistan’s inflation is forecast to reach 6.0 per cent in 2025, fueled by increased state lending to public enterprises and a 10 per cent hike in public sector wages and pensions.

In Uzbekistan, inflation peaked at 10.3 per cent in March, prompting the central bank to raise interest rates to counter rising investment demand, energy tariffs, and persistent price pressures.