Most countries in the Caucasus and Central Asia maintain strong economic growth momentum, despite an overall slowdown in the Commonwealth of Independent States (CIS) and Georgia region. These findings are presented in the new UN report “World Economic Situation and Prospects 2026.”
According to the report, following 4.6 per cent growth in 2024, the region’s GDP is estimated to have expanded by only 2.2 per cent in 2025. Growth is forecast at 2.1 per cent in 2026 and 2.5 per cent in 2027 amid ongoing geopolitical uncertainties.
The prolongedconflict in Ukraine and the gradual tightening of sanctions against Russia continue to negatively affect the macroeconomy of the entire region.
In contrast, the introduction of higher United States import tariffs is expected to have only a limited direct impact on the CIS economies given their minimal exposure to the United States market. However, these countries remain vulnerable to potential indirect effects, including weaker commodity prices and lower demand from China and the European Union.
Countries in the Caucasus and Central Asia have demonstrated resilience. The benefits from serving as transshipment points in trade with Russia are gradually diminishing, yet in 2025 the subregion maintained strong growth due to domestic factors: buoyant private consumption underpinned by rising real incomes, declining unemployment, solid remittance inflows, and rapid household credit growth.
Public investments were directed toward infrastructure projects, including regional ones implemented in cooperation with China.
In particular, Kazakhstan’s economy grew by approximately 6.1% in 2025, fuelled by higher oil production and robust domestic demand. Oil output is expected to increase further in 2026 and 2027.
Kyrgyzstan, Tajikistan, and Uzbekistan continue to benefit from high gold prices, large-scale infrastructure investments, and tourism sector development.
Inflation remains a challenge in the region: in many CIS countries, it rose due to higher food prices, budgetary spending, and other factors. Some Central Asian states recorded double-digit inflation rates. In Kazakhstan, rapid credit expansion (including subsidized loans), currency depreciation, and increases in regulated utility tariffs pushed inflation upward. Although inflation is expected to decline in 2026, planned tax hikes may temporarily slow this process in Kazakhstan and Russia.
Positive trends are observed in labor markets: in Central Asian countries that traditionally supply migrants to Russia, the number of domestic jobs increased in 2025.
Meanwhile, despite tighter conditions for labor migrants in Russia, the volume of remittances reached record levels in dollar terms in the first half of the year. However, their relative importance in the region’s economies is gradually declining.
The report highlights long-term challenges: many CIS countries, including those in Central Asia, remain highly dependent on commodity exports, have underdeveloped digital infrastructure, low agricultural productivity, labor market mismatches, and growing vulnerability to climate risks.
However, there is reason for optimism — the economies of many CIS countries are projected to grow by at least 5-6% in 2026 and 2027, with lower-income countries expanding at faster rates.///nCa, 9 January 2026