Caucasus Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Caucasus Country Risk Report
Product Price
$1,195.00

Core Views

  • Political tensions in the South Caucasus will remain high over the coming years as increased Russian intervention in Georgia's breakaway territories fuels concerns that Russia will attempt to annex Abkhazia and South Ossetia. Meanwhile, Azerbaijani-Armenian relations will remain strained over the conflict surrounding Nagorno-Karabakh.

  • Armenia's economy will continue to struggle during 2016-2017 primarily due to its trade and remittance flow links with ailing Russia. Beyond this we continue to see little means of diversifying its growth model away from one driven by private consumption underpinned by volatile remittance flows.

  • Georgian real GDP growth will slow over the next two years relative to the 5.9% average growth achieved between 2011 and 2015 due to exposure to Russia's economic crisis, which has been triggered by Western sanctions and magnified by a dramatic fall in global oil prices. We forecast the Russian economy to contract 1.0% in real terms 2016, following a 3.7% contraction in 2015.

  • Azerbaijan will continue to tread a fine line between siding with either Russia or the European Union (EU). Azerbaijan's economic interests can be better served by increasing trade and energy routes with the EU, while maintaining good relations with Moscow will likely assist in keeping the autocratic regime of President Ilham Aliyev in power.

Key Risks

  • Given the close links between the Armenian economy and Russia, Armenian real GDP growth will remain subdued in the years ahead, on the back of Russian economic weaknesses. However, an alleviation of the sanctions, a sustained rise in oil prices and a strengthening of the rouble, and recovering oil prices could all see Russian growth restored, which in turn would provide a notable boost to the Armenian economy, as exports rise and remittance flows from Russia increase.

  • Azerbaijan's reliance on government support for a rebalancing towards the non-oil sector could prove problematic. Levels of perceived corruption are extremely high, which could prove a deterrent to investment. This is highlighted by Azerbaijan's below-average score of 51.6 out of 100 in our Operational Risk Index, which is below average among EM and global peers.

BMI Index League Tables
9
Core Views
11
Key Risks
11
Chapter 1
13
Economic Growth Outlook
13
Economy To Remain Vulnerable To External Shocks
13
DP By Expenditure Outlook
14
TABLE: GDP GROWTH FORECASTS
15
TABLE: PRIVATE CONSUMPTION FORECASTS
15
TABLE: GOVERNMENT CONSUMPTION FORECASTS
15
TABLE: FIXED INVESTMENT FORECASTS
15
TABLE: NET EXPORTS FORECASTS
15
Chapter 1
17
The Armenian Economy To 2025
17
Convergence To Stall
17
TABLE: LONG-TERM MACROECONOMIC FORECASTS
17
Chapter 1
19
Domestic Politics
19
Turning Its Back On Europe
19
TABLE: POLITICAL OVERVIEW
19
Long-Term Political Outlook
21
Nagorno-Karabakh Conflict To Stay At Centre Stage
21
Chapter 2
25
Economic Growth Outlook
25
Stagflation To Persist
25
GDP By Expenditure Outlook
27
TABLE: GDP GROWTH FORECASTS
27
TABLE: PRIVATE CONSUMPTION FORECASTS
27
TABLE: GOVERNMENT CONSUMPTION FORECASTS
27
TABLE: FIXED INVESTMENT FORECASTS
27
TABLE: NET EXPORTS FORECASTS
27
Chapter 2
29
The Azeri Economy To 2025
29
Trend Growth Bolstered Up To 2025
29
TABLE: LONG-TERM MACROECONOMIC FORECASTS
29
Chapter 2
31
Domestic Politics
31
Situation Tense, But Escalation Unlikely
31
TABLE: POLITICAL OVERVIEW
31
Long-Term Political Outlook
33
Everything Hinges On Nagorno-Karabakh
33
Chapter 3
37
Economic Growth Outlook
37
Weak Trade To Drag On Growth
37
GDP By Expenditure Outlook
38
TABLE: GDP GROWTH FORECASTS
38
TABLE: PRIVATE CONSUMPTION FORECASTS
38
TABLE: GOVERNMENT CONSUMPTION FORECASTS
39
TABLE: FIXED INVESTMENT FORECASTS
39
TABLE: NET EXPORTS FORECASTS
39
Chapter 3
41
The Georgian Economy To 2025
41
Foreign Investment To Support Growth
41
TABLE: LONG-TERM MACROECONOMIC FORECASTS
41
Chapter 3
43
Domestic Politics
43
EU Membership To Remain Distant Prospect
43
TABLE: POLITICAL OVERVIEW
43
Long-Term Political Outlook
45
Pro-Western Path To Continue Despite Mounting Opposition
45
Chapter 4: BMI Global Macro Outlook
49
Global Macro Outlook
49
Emerging Markets Nearing Inflexion Point
49
TABLE: GLOBAL ASSUMPTIONS
49
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
50
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
50
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
51
TABLE: ARMENIA - MACROECONOMIC DATA & FORECASTS
53
TABLE: AZERBAIJAN - MACROECONOMIC DATA & FORECASTS
53
TABLE: GEORGIA - MACROECONOMIC DATA & FORECASTS
53

Assess your risk exposure in Azerbaijan, Georgia, Armenia with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Azerbaijan, Georgia, Armenia with confidence.

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