Cairo: Hani Kamal El-Din
The International Monetary Fund (IMF) has warned that while the direct economic impact of newly imposed U.S. tariffs on the South Caucasus and Central Asia remains minimal, indirect consequences could significantly challenge the region’s economic stability.
In a press briefing held at the Central Bank of Uzbekistan, Thanos Arvanitis, Deputy Director of the IMF’s Middle East and Central Asia Department, emphasized that the ripple effects of escalating global trade tensions are already reshaping the macroeconomic landscape.
“The volume of exports from these countries to the U.S. is relatively low,” Arvanitis noted. “Moreover, key exports such as oil and gas are currently excluded from the scope of U.S. tariffs, limiting any immediate economic disruption.”
However, the IMF representative underscored that three indirect channels could amplify the region’s vulnerability in the coming months:
1. Slower Global Economic Growth Could Hit Key Trade Partners
Trade friction between major economies has fueled global uncertainty, with analysts warning of a slowdown in international commerce. Arvanitis explained that such a downturn would likely affect the primary trading partners of South Caucasus and Central Asian nations, ultimately translating into reduced export demand and weaker GDP performance across the region.
2. Financial Volatility Driving Up Borrowing Costs
Global financial markets have entered a period of pronounced instability. For emerging markets, including those in Central Asia and the South Caucasus, the cost of external borrowing has risen, reflecting wider credit spreads and investor caution. According to Arvanitis, governments in these regions should brace for tighter financing conditions and consider proactive debt management strategies.
3. Commodity Price Swings Creating Winners and Losers
Crude oil prices have fallen by approximately 15% since the beginning of the year, putting pressure on oil-exporting economies in the region. Conversely, gold prices have surged to historic highs, benefiting countries such as Uzbekistan, which have significant gold mining sectors. The IMF suggests that this commodity divergence could widen the economic gap between resource-importing and exporting nations in the region.
“What we’re witnessing is a shift in the global trade framework,” Arvanitis said. “While tariffs may not strike directly, they create systemic uncertainty that reverberates through growth expectations, capital markets, and commodity dynamics.”
He added that ongoing negotiations among global powers may eventually ease tensions, but until a durable trade framework is in place, developing economies must remain vigilant and adaptive.
