TOPIC OF THE WEEK: Diverging trends in 2025 CA positions
Four countries, including Armenia, Azerbaijan, Georgia, and Uzbekistan reported 4Q25 and full-year BoP data over the last week. Tajikistan and Kyrgyzstan, the countries sitting at both extremes of CA positions and, in my view, presenting the most interesting analytical cases, are yet to do that.
The four reporting economies can be broadly divided into two groups. On the one hand, Armenia and Azerbaijan have seen worsening current accounts in 2025, with the former posting its largest gap since 2018 and the latter its lowest surplus since 2020. Still, Armenia has benefited from a geopolitics-driven improvement in sentiment, related to the advancing peace process with Azerbaijan, which has generated strong inflows on the financial account that have more than offset the 7.2 percent of GDP CA deficit. This particular BoP structure is likely to persist, especially if Pashinyan secures victory at the June elections as it appears probable. Azerbaijan has been hurt by lower oil prices as the CA surplus has narrowed significantly from about 30 percent of GDP in 2022 to only 4.6 percent of GDP in 2025. However, the ongoing Middle East crisis will provide a welcome boost to its external position this year.
On the other hand, Georgia has posted a record low 2.6 percent of GDP CA deficit and Uzbekistan has seen its narrowest CA gap since 2022 at 3.9 percent of GDP. In the case of Georgia, this was driven by very robust inflows on the services account, including all-time high income from tourism. The calmer political dynamics in the country will continue to attract tourists, especially if the Iran crisis proves to be more lasting. Uzbekistan, in turn, benefited from exceptionally high levels of remittances and I expect this trend to be secure in the coming years.
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