Azerbaijan and Kazakhstan benefit from Middle Corridor growth

Geopolitical tensions in the Middle East and shipping risks in the Strait of Hormuz are creating opportunities for Azerbaijan and Kazakhstan to increase export revenues. According to a report by Moody's, rising energy prices benefit these exporters by strengthening state finances and supporting economic development programs.

These risks are also increasing the importance of alternative trade routes, specifically the Middle Corridor. This Trans-Caspian International Transport Route, which connects China to Europe via Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, and Turkey, is benefiting from the redirection of global trade flows. While the expansion of this corridor offers new prospects for transit and logistics, Moody's notes that significant investment is required to overcome infrastructure limitations and debt risks.

In a related development regarding regional connectivity, plans to restore passenger shipping via the Caspian Sea between Azerbaijan and Kazakhstan are being discussed. While economist Eldeniz Amirov suggests that the restoration of this route may not cause immediate massive economic shifts, it is viewed as a positive step for tourism and bilateral cooperation. The route, which operated until 2020, could offer a lower-cost alternative to air travel, though it cannot compete with aviation in terms of speed.