The expansion of the Middle Corridor is becoming increasingly important for the economic prospects of Central Asia and the South Caucasus. What was initially viewed mainly as an alternative transport route between Asia and Europe is gradually gaining wider economic importance, affecting financing conditions and the development of domestic financial markets.

The corridor connects China with Europe through Central Asia, the Caspian Sea, Azerbaijan, Georgia and Türkiye. Its growing importance is closely linked with the restructuring of regional trade flows since the outbreak of the Russia-Ukraine war in 2022. As businesses kook for routes that bypass Russia, countries along the Middle Corridor have gained an opportunity to increase their share of transit activity, trade, and related investments.

Azerbaijan and Kazakhstan could use this advantage to push ahead with economic diversification and reduce dependence on hydrocarbons. According to Moody’s, the non-oil sectors of both economies are showing steade growth, supported mainly by national banks and government diversification programmes. This combination has created a favorable environment for financial institutions, while also........

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