Domestic economic conditions are playing a growing role in shaping the outlook for Azerbaijan, Armenia, Kazakhstan and Uzbekistan, according to global financial services group ING.
ING, which refers to the four economies as the CIS-4, said higher commodity prices are strengthening external and fiscal buffers in key exporting countries. In particular, Azerbaijan and Kazakhstan are benefiting from currency stability and easing inflation, giving policymakers greater flexibility over interest rates.
In Armenia, ING said the recent parliamentary election result supports policy continuity, although unresolved tensions with Azerbaijan and uncertainty surrounding EU integration could weigh on investor sentiment.
With inflation remaining moderate, the Central Bank of Armenia is expected to keep its policy rate unchanged at 6.5% at its next meeting.
Azerbaijan is projected to benefit most from elevated energy prices, with stronger fuel revenues improving both its fiscal position and external balance. Analysts forecast a budget surplus of around 5% of GDP and a current account surplus of roughly 11% of GDP in 2026.
In Kazakhstan, despite a recent 100-basis-point interest rate cut, real interest rates remain elevated, while the tenge continues to be supported by non-oil exports and portfolio inflows.
ING expects the central bank to pause further monetary easing for now, although additional rate cuts may be possible later if currency stability is maintained.
Uzbekistan is seen as having the strongest case for further monetary easing, supported by the resumption of gold exports, renewed portfolio inflows and slowing inflation.
ING said the Central Bank of Uzbekistan could reduce its policy rate from 14% at its next meeting, even as many global central banks remain cautious.
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