Page 4 - Small Stans and Causcasus Outlook 2022

for his son Serdar.

In Georgia, the sudden return last year from eight years of exile of
former Rose Revolution president Mikheil Saakashvili appears to have
flopped. His supporters are intense and loud, but the now imprisoned
Saakashvili does not appear to have caught the popular imagination.
Georgian Dream is still calling the shots, but it's increasingly hardline
rule has led to open rifts with the EU and US. As things stand at home,
however, the ruling party appears set for some plain sailing, but you
never know with Georgia, the next political drama is never far away.

Georgia’s economy is forecast to grow at a stronger clip this year
versus the pre-crisis average performance, but everything will hinge on
the resumption of tourism. A proper end to the pandemic is badly
needed by this small nation.

Armenia enters 2022 with a largely calm political situation thanks to a
fraught general election last year that enabled Armenians to dissolve
some of the tension created by the painful loss of territory to Azerbaijan
in the Second Karabakh War at the end of 2020. Despite the defeat,
Prime Minister Nikol Pashinyan was swept back into office. His
challenge now is to find an acceptable peace with Azerbaijan. The
conflict still simmers, with clashes reported almost on a weekly basis,
but if Yerevan and Baku can reach a compromise, great economic
potential, including via the reopening of the Armenian-Turkish border
after nearly 30 years, could be unlocked. The opportunities are not to
be sniffed at by Armenia, an impoverished nation.

Armenia has set a 7% growth target for 2022, but the international
financial institutions, sensing a global slowdown, with the world
increasingly dogged by inflation, are increasingly pessimistic on
emerging economies. The government officials behind that figure may
need a rethink. The World Bank and IMF currently see around 5%.
Tourism and tech are two key areas for Armenian growth.

In Azerbaijan, strongman Ilham Aliyev has never been more popular, a
predictable consequence of the Karabakh victory. Opposition voices still
struggle to be heard, but at the risk of riling the repressive authorities,
who are not slow to act. Azerbaijan still has a huge job on its hands
demining and reconstructing the territories it took back from ethnic
Armenians in the conflict. “Brother nation” and armed drone supplier
Turkey will expect a generous piece of the pie, with the UK and Israel
set to be other notable investors as the post-war effort picks up.

Azerbaijan, an oil and gas-rich country, is presently enjoying improved
income streams from rising oil prices and gas exports that it is now able
to send into Europe via new Southern Gas Corridor interconnected
pipelines that stretch all the way to southern Italy. GDP growth for this
year is predicted at 3.9% by the government.

Economic diversification—with petrochemicals, renewables, agriculture

4 Small Stans & South Caucasus Outlook 2022 www.intellinews.com