IMF: Higher Energy and Food Import Prices Fuel Inflation in Central Asia and the Caucasus

Rising prices of imported energy and food have again intensified inflationary pressure in the Caucasus and Central Asia, with the effect differing significantly across countries, IMF Middle East and Central Asia Department Director Jihad Azour said at a press briefing on October 15.

Azour said the war in the Middle East is delivering an uneven economic blow to the region. Most of the Caucasus and Central Asia has shown resilience, he said, citing strong remittance inflows and high investment activity. Growth is expected to slow from 6.2% in 2025 to 5.2% in 2026 and 5.0% in 2027. Inflation is expected to keep falling from high levels, though at different rates across countries. Kyrgyzstan is forecast to lead the region in inflation, with prices projected to rise 12.7% in 2026 and 14.3% in 2027.

The IMF recommends keeping price stability alongside budget sustainability, with monetary policy as the first line of defence. Governments should avoid broad subsidies and instead support the most vulnerable groups through targeted, temporary and budget-neutral cash payments. The full Regional Economic Outlook report will be published on October 22 in Dubai.