IMF: Middle Corridor, private sector to help Caucasus, Central Asian economies withstand external shocks

The development of large infrastructure and investment projects, including the Middle Corridor, as well as the strengthening of transport and logistics ties, are important conditions for increasing the resilience of the economies of the Caucasus and Central Asia to external shocks, Assistant Director of the IMF's Middle East and Central Asia Department Roberto Cardarelli said at the presentation of the International Monetary Fund's regional economic outlook for the Middle East and Central Asia held in Uzbekistan, Report informs.

According to the IMF representative's assessment, two factors are of particular importance for reducing the vulnerability of the region's economies to external crises: strengthening regional connectivity and developing the private sector.

"First, it is connectivity and regional trade with partners - these factors always contribute to strengthening economic resilience. The implementation of investment projects is also of great importance. We know that the development of the Middle Corridor is currently being actively discussed in the region," Cardarelli noted.

He named the stimulation of the private sector as the second important direction, emphasizing that it is business that acts as one of the main drivers of economic growth, promotes the development of new sales markets, and economic diversification.

According to Cardarelli, excessive dependence on a single sector increases the vulnerability of national economies to external shocks. As an example, he cited the tourism industry, which was seriously affected during the COVID-19 pandemic, as well as the oil sector, which is subject to the influence of sharp fluctuations in world prices.

"A combination of regional integration, including through projects such as the Middle Corridor, and the development of private initiative will allow countries to minimize losses in the event of adverse scenarios in the future and gain maximum benefit from favorable market conditions," he added.