Teh economic outlook for the Caucasus and Central Asia has seen an upward revision, with projected growth rates of 5.5% for 2025 and 5.1% for 2026.This adjustment, up from previous forecasts of 5.4% and 5.0% respectively, is largely attributed to a stronger growth trajectory in Kazakhstan. The nation’s economic performance is bolstered by increased government spending on capital investments and social services. Furthermore, the earlier-than-anticipated launch of the Tengiz oil field expansion project is expected to significantly support mining output.

kazakhstan’s economic prospects are further enhanced by OPEC+’s decision to raise oil production for a third consecutive month, allowing the country to operate at maximum available capacity. Growth records in other nations within the subregion have remained consistent with earlier expectations.

Tho, the subregional inflation forecast for the Caucasus and Central asia has been adjusted upward to 7.8% for 2025 and 6.7% for 2026, an increase from the previously forecasted 6.9% and 5.9%. This revision is driven by stronger inflationary pressures observed in Armenia, Kazakhstan, and the Kyrgyz Republic.

Armenia’s annual inflation rate climbed to 3.0% in the first five months of 2025, a notable increase from 0.8% during the same period last year. Despite a relatively tight monetary policy, Kazakhstan’s inflation rate reached 10.1% for the first five months of 2025, up from 9.0% a year prior, primarily due to rising utility prices. The Kyrgyz Republic experienced an inflation rate of 8.0% in May 2025, largely influenced by its continued reliance on food and energy imports.

In contrast, Tajikistan maintained muted consumer inflation at 0.1% in May 2025. Azerbaijan’s inflation rate stood at 5.9% for January to may 2025,reflecting the lingering effects of administered price increases for fuel and utilities. Georgia’s annual inflation was recorded at 3.5% in May 2025. Turkmenistan’s inflation is projected at 6.0% for 2025, attributed to extensive credit extended to state-owned enterprises and a 10.0% rise in public sector wages and pensions. Uzbekistan’s inflation rate peaked at 10.3% in March 2025, prompting its central bank to increase interest rates in response to rising investment, energy tariff hikes, and slower-than-expected disinflation.