Webinar Recap: The IMF's Economic Outlook for Central Asia and the Caucasus
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The American Foreign Policy Council's Central Asia-Caucasus Institute recently hosted a webinar on the region's economic outlook. Dr. Subir Lall from the IMF's Middle East and Central Asia Department and Dr. Mamuka Tsereteli from AFPC discussed economic forecasts for this resource-rich region, home to some of the world's fastest-growing economies. The webinar examined whether Central Asia and the Caucasus can sustain their recent robust growth and what steps countries can take to maintain it.
Watch the full discussion below or on YouTube.
Current Economic Situation
In 2024, Central Asia and the Caucasus experienced stronger levels of growth than predicted. However, inflation remains above central bank targets in several countries, highlighting persistent price pressures. Inflation is most pronounced in Kazakhstan, where levels are expected to remain significantly higher than forecasted this year, and is most constrained among the region’s oil importers. Inflation levels are projected to gradually decline across the region.
Global Trade Tensions and External Spillovers
Dr. Lall described how global shifts, including U.S. tariffs, can indirectly affect the region. While Central Asia and the Caucasus have limited direct U.S. trade, external spillovers could include weaker demand, volatile commodity prices, and increased uncertainty in trading relationships. Effects vary by country, with Tajikistan and Uzbekistan depending on remittances, while Georgia and Armenia face higher exposure to travel and tourism impacts.
Overall, risks for the region tilt downward. Trade tensions and global political concerns reduce external demand while increasing commodity price volatility. Regional uncertainties compound these issues by reducing confidence and slowing reform momentum. However, the region could benefit from trade diversion and faster reforms.
Economic Forecast for the Future
The current growth momentum offers states a "critical opportunity" – what Dr. Lall calls the "most historic moment since the fall of the Soviet Union" – to strengthen policy frameworks and entrench market-based reforms for sustained regional growth.
As countries navigate global uncertainties, structural reforms aligned with international standards would unlock new productivity and competitiveness. Total factor productivity, once a key regional driver, has stalled recently. Private sector privatization and growth reforms are essential to reverse this slowdown. With current reforms, Dr. Lall believes the region can avoid a low-productivity trap. External reforms would boost competitiveness, while reinforcing monetary frameworks and strengthening reserves remain imperative.
Based on the AFPC webinar featuring Dr. Subir Lall, Deputy Director of the IMF's Middle East and Central Asia Department, and Dr. Mamuka Tsereteli from the American Foreign Policy Council's Central Asia-Caucasus Institute.