Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/318446 
Year of Publication: 
2025
Series/Report no.: 
Occasional Paper No. 12
Publisher: 
Oesterreichische Nationalbank (OeNB), Vienna
Abstract: 
The three South Caucasus economies - Armenia, Azerbaijan and Georgia - have performed relatively well since the COVID-19 pandemic, benefiting from certain spillovers of Russia's war against Ukraine. The oil importers Armenia and Georgia achieved double-digit GDP growth in 2022 - 12.6% and 11.0%, respectively, followed by annual average rates of 7% to 8% in 2023-24. A recovery in tourism and private consumption since 2021 and a (temporary) surge in immigration, capital and remittance inflows and intermediated trade triggered by the war and sanctions have bolstered economic growth and fiscal revenues and shored up external balances as well as national currencies. The strengthened currencies contributed to declines in inflation and public debt, while vigorous growth helped lower unemployment and poverty. Structural problems and insufficient investment in its oil industry are largely responsible for Azerbaijan's lower GDP growth dynamics - 4.7% in 2022 and an average of 2% to 3% in 2023-24. Notwithstanding the suffering inflicted by the Nagorno-Karabakh war, fiscal expenditure for the reconstruction of the region (Azerbaijan) and for sheltering and integrating about 100,000 refugees (Armenia), respectively, stimulated growth in 2023-24. While the European Union is Azerbaijan's dominant trading partner, Russia and China together outstrip the EU in trade with Armenia and Georgia. EU integration prospects of candidate country Georgia are currently shrouded in political and geo-economic uncertainty. The same holds true for Armenia's recently expressed EU aspirations.
Subjects: 
fiscal policy
monetary policy
exchange rate regime
sanctions
trade and financial spillovers
banking
oil and gas exporters
relokanty
remittances
intermediated trade
COVID-19
standard of living
South Caucasus
Armenia
Azerbaijan
Georgia
geo-economic tensions
JEL: 
E52
E63
G21
G28
P34
Document Type: 
Research Report

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