Despite rising geopolitical tensions in the Middle East, macro-financial conditions for the banking systems of the Caucasus and Central Asia (CAC) countries are expected to remain stable, APA-Economics reports, citing the international rating agency Moody’s Ratings.
According to the agency’s assessment, the pace of economic growth in the CAC region remains among the highest compared to other regions, and this is one of the main factors supporting the banking sector’s performance.
Moody’s stated that the economic dependence of regional countries, including Azerbaijan, on the Middle East is limited. It was noted in the presentation that Azerbaijan and other CAC countries do not import hydrocarbons from Gulf Cooperation Council (GCC) countries, while the volume of trade relations with these countries remains low.
According to the agency, the share of Azerbaijan’s imports of goods from GCC countries in total imports is less than 1%, which limits the direct impact of possible economic shocks in the Middle East on the country.
Moody’s also emphasized that the region’s financial indicators remain stronger compared to 2022-2023. Capital adequacy, liquidity and asset quality indicators in banking systems remain stable.
According to the agency, rising energy prices could create additional fiscal revenues for Azerbaijan as an exporter of oil and gas and further strengthen the country’s external position.
“Azerbaijan’s high strategic foreign exchange reserves and strong external balance are among the main factors supporting financial stability against the backdrop of global geopolitical risks,” Moody’s added.
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