Based on the World Bank’s latest report on the economies of Europe and Central Asia, economic growth in the South Caucasus is expected to slow to 3.7% in 2025, following a 5.7% expansion recorded in 2024. Growth is projected to moderate further to 3.3% in 2026.
The report attributes this slowdown to declining oil production in Azerbaijan and the normalization of growth in Armenia and Georgia after several years of strong post-pandemic performance.
Notably, the World Bank revised upward Georgia’s growth forecast for 2025 by 1.5 percentage points to 7%, reflecting sustained investment and domestic demand. Armenia’s growth outlook was also raised by 1.2 percentage points to 5.2%, while Azerbaijan’s projection worsened by 0.7 percentage points to 1.9%, due to reduced oil output.
The World Bank’s updated 2025 forecasts for the region are as follows:
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Georgia – 7% economic growth (↑ 1.5 p.p.)
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Armenia – 5.2% economic growth (↑ 1.2 p.p.)
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Azerbaijan – 1.9% economic growth (↓ 0.7 p.p.)
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Russia – 0.9% economic growth (↓ 0.5 p.p.)
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Turkey – 3.5% economic growth (↑ 0.4 p.p.)
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Kazakhstan – 5.5% economic growth (↑ 1 p.p.)
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Uzbekistan – 6.2% economic growth (↑ 0.6 p.p.)
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Ukraine – 2% economic growth (unchanged)
Overall, the report suggests that while growth across the South Caucasus will moderate in 2025, Georgia is expected to remain one of the fastest-growing economies in the region.
Image source: BMG
