BAKU, Azerbaijan, November 13. Economic growth across many countries in the Caucasus and Central Asia remains strong in 2026, although it has slowed somewhat in Azerbaijan and Kazakhstan. Roberto Cardarelli, Chief of the South America II Division in the IMF's Western Hemisphere Department and mission chief for Argentina, made the remarks on Friday during the presentation of the IMF's regional economic outlook, Caucasus and Central Asia: Navigating Uncertainty.
According to Cardarelli, growth has remained particularly robust in the region’s oil-importing countries.
He highlighted two primary factors supporting economic activity: high volumes of remittances and sustained growth in real credit.
"Remittances remain very high. Another factor is the growth of real credit, not nominal, but real growth, adjusted for inflation, which remains quite stable and very high in several of the region’s economies," he noted.
Cardarelli also pointed to an influx of financial and human capital into the region following the onset of the war between Russia and Ukraine, alongside an increase in remittances.
According to him, these processes have had a positive impact on the economies of the region, with this effect intensifying in 2026.
At the same time, inflation trends vary across the region. In Uzbekistan and Kazakhstan, inflation has declined, whereas in several other countries, rising energy costs and supply shocks have caused it to accelerate.
As Cardarelli remarked, inflation is exceeding target levels in nearly six of the region’s eight countries, a key issue addressed in the IMF report.
He explained that one of the reasons for these divergent inflation trends lies in the nature of the monetary policies being pursued. Kazakhstan and Uzbekistan, where inflation has declined, are maintaining relatively tighter monetary policy conditions. Meanwhile, in Kyrgyzstan, where inflation has accelerated the most, monetary policy remains stimulative.
Price dynamics are also influenced by exchange rates. The strengthening of nominal effective exchange rates in several countries has helped mitigate the impact of rising energy costs on domestic prices. This effect was particularly notable in Kazakhstan, which saw the most significant currency appreciation among the countries under review.
Cardarelli added that the role of subsidies in the pass-through of rising energy costs to domestic prices is also addressed in the IMF report.
