Economic Monitor

Uzbekistan’s economy grew strongly by 7.7% in 2025, supported by robust private consumption and investment, with solid—though slightly slower—growth expected in 2026. Inflation continues to decline, while fiscal and external balances have improved, public debt remains low, and international reserves are at record levels. Although exports remain volatile due to irregular gold shipments, the economy has shown resilience, with only limited exposure to the Iran conflict. At the same time, labour migration to Germany offers significant long-term potential, provided existing bottlenecks are addressed.

The Armenian economy grew by a substantial 7.2 per cent in 2025 compared with the previous year, with consumption and investment being the main drivers. For 2026, the IMF forecasts robust growth of 5.3 per cent. Overall, the impact of the conflict with Iran remains limited; the fixed-price gas contract cushions much of the energy price shock. However, a further rise in inflation could dampen growth.

The Iran conflict is expected to significantly affect Kosovo’s economy in 2026 by driving up oil prices, increasing import costs by 1.1% of GDP, slowing growth to 3.3%, and raising inflation to 5.9%—the largest forecast revisions in the region. Despite these shocks, growth will continue to be supported by strong private consumption, while remittances and FDI are expected to remain resilient. The current account deficit and budget deficit are projected to widen, although these changes are driven mainly by strong domestic demand and higher social spending rather than the conflict itself.

North Macedonia’s economy grew by 3.5% in 2025, driven primarily by investment. The IMF forecasts growth of 3.1% for 2026, whilst the country’s close ties with the EU make its economy vulnerable to the weaker growth outlook in Europe. Higher energy prices resulting from the Iran conflict are likely to push up inflation and widen the trade deficit.

The tourism boom in Albania is positively impacts macroeconomic developments. GDP growth remained stable at 3.8% in 2025. The IMF growth forecast for 2026 was revised downward from 3.6% to 3.4% due to the Iran conflict. Rising service exports and high FDI inflows led to an appreciation of the Albanian lek.

After two years of stagnation, the Moldovan GDP grew by 2.4% in 2025, driven by investment and agriculture. This growth was also supported in 2026 by investment and structural reforms under the Growth Plan (GP).

In 2025, Kosovo’s economy grew by an estimated 4% despite political instability, but remained below the previous year’s growth of 4.6%. This slowdown is mainly due to a sharp increase in imports of goods (particularly electricity due to power plant failures) while consumption remained stable. Inflation rose to 5.3% in November 2025, driven by food prices.

The economy is growing strongly, at an estimated 7.3% in 2025, driven by rising consumption and investment. Inflation continues to fall and is expected to reach 5% by the end of 2027.

In 2025 growth remains high at 7.4% yoy, mainly driven by consumption. In 2026 growth is expected to normalise towards the long-term trend growth rate of around 5%.

Robust economic growth of 5% is expected in 2025/2026. The finalisation of the peace agreement with Azerbaijan and the opening of the borders offer considerable upside potential.

Growth is expected to slow to 2.0% yoy in 2025, followed by a moderate increase to 2.8% in 2026. As the war continues, the focus remains on repair measures rather than broad-based reconstruction (“Build Back Better”).

After strong economic growth in 2024, a slowdown is expected this year. Inflation remains high and the numbers are likely to exceed the official figures reported.