BAKU, Azerbaijan, September 14.
Azerbaijan-Armenia normalization will boost trade in the Caucasus
region, Moody’s said in a report obtained by Trend.
“The most significant positive geopolitical development is the
continuing normalization of relations between Armenia and
Azerbaijan. A more durable settlement would support regional
stability, improve connectivity and create new opportunities for
trade and transport links across the Caucasus,” reads the
report.
On October 21, 2025, President of Azerbaijan Ilham Aliyev
announced that Azerbaijan had lifted all restrictions on cargo
transit to Armenia that had been in place since the occupation.
The first cargo to transit the new route was grain from
Kazakhstan. Since then, various products have been regularly
shipped to Armenia from Kazakhstan and Russia through Azerbaijan,
as well as from Azerbaijan.
To date, Azerbaijan has exported nearly 17,000 tonnes of diesel
fuel and around 5,000 tonnes of RON-92 and RON-95 gasoline to
Armenia to date.
Moreover, nearly 60,000 tonnes of grain, more than 9,000 tonnes
of fertilizer, 1,414 tonnes of propane, 133 tonnes of aluminum,
1,114 tonnes of coal and 608 tonnes of timber have been delivered
from Russia to Armenia through Azerbaijan.
Moody’s believes that political and geopolitical risks will
remain a key constraint on creditworthiness in the Central Asia and
Caucasus region, even as resilience continues to improve.
“The war in Ukraine remains the dominant geopolitical risk,
weighing directly on Ukraine and Belarus and indirectly on the
wider region through trade, remittance, energy and confidence
channels,” said the rating agency analysts.
At the same time, Moody’s notes that many sovereigns have
strengthened their capacity to deal with geopolitical shocks.
“Central Asian economies continue to broaden economic links with
the EU, China, Türkiye and the Gulf countries. Trade
diversification, stronger external buffers and greater regional
cooperation have reduced vulnerability to external shocks and
improved policy flexibility. Continued investment in transport,
energy and digital connectivity is also creating alternative
channels for trade and growth beyond traditional Russia-centered
routes,” the report says.
Moreover, Moody’s notes that the conflict in the Middle East
represents a secondary geopolitical risk for the region, with
credit implications likely to materialize through energy, food and
transport prices rather than direct trade or financial
channels.
“Energy-importing sovereigns, particularly Moldova and some
Western Balkan economies, remain more exposed to these issues,
while higher energy prices support fiscal and external balances in
exporters such as Kazakhstan and Azerbaijan. Overall, stronger
policy frameworks, improved resilience and continued economic
diversification will help contain these risks and support improving
credit fundamentals across most sovereigns,” the report says.
