Economic normalization between Azerbaijan and Armenia is beginning to produce measurable effects in trade, transit and regional connectivity. The most important point is that both countries have moved from a zero-sum confrontation toward limited, practical cooperation. That shift matters because in the South Caucasus, even modest changes in transport access, customs flows, and investor expectations can have outsized geopolitical and economic consequences.

Moody's recent assessment clearly reflects this transition, as the growing economic cooperation between Baku and Yerevan, progress in the construction of transport corridors, and sustained international support for the peace process reduce geopolitical risks even in the absence of a fully ratified peace treaty. That is a cautious but meaningful judgment. It suggests that rating agencies now see normalization not merely as a diplomatic aspiration, but as a factor with real implications for state resilience, fiscal flexibility, and regional market integration.

Traditionally, sovereign rating agencies assessed the South Caucasus primarily through the lens of military tensions and political uncertainty. Today, they are increasingly evaluating the region based on economic integration, infrastructure development, and transport connectivity.

The agency also highlighted Azerbaijan's strong fiscal position, emphasizing the government's commitment to medium-term fiscal consolidation beyond the oil sector.

According to Moody's, Azerbaijan has successfully narrowed its non-oil primary deficit through stronger non-oil revenue collection while maintaining more moderate........

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