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Despite an unsettled global backdrop, Central Asia’s economic performance in 2025 was solid, if uneven. The IMF’s October 2025 Regional Outlook projected real GDP growth in Central Asia and the Caucasus at 5.6 per cent, slightly higher than in 2024. Growth was strongest in the two poorest countries, Tajikistan (7.5 per cent) and Kyrgyzstan (8.0 per cent), and weakest in energy exporters Turkmenistan (2.3 per cent) and Azerbaijan (3.0 per cent).
All are middle-income countries, though Kazakhstan is expected to soon graduate to high-income country status.
The external shocks of US tariffs and Russia’s war in Ukraine had little macroeconomic impact. Non-oil exports to the United States were small while remittances from migrant workers in Russia continued to increase. Many young Russians avoiding conscription migrated and started small and medium-sized enterprises, especially in Kazakhstan. Kyrgyzstan and Kazakhstan also benefitted from trade diversion to circumvent sanctions on Russia.
Presumably related to this economic stability, there was little political upheaval in Central Asia in 2025. This was less true in the Caucasus, where political opposition to the conservative Georgian Dream government was substantial and Armenia continued to struggle with the loss of its war with Azerbaijan and the dissolution of independent Artsakh (Nagorno-Karabakh).
The leaders of Armenia and Azerbaijan met US President Donald Trump at the White House on 8 August. The countries agreed to a 99-year lease under which a US consortium would construct the Trump Route for International Peace and Prosperity, linking Azerbaijan to Turkiye and providing a shorter route from Central Asia to Europe than current routes through Georgia.
The longest-running interstate dispute in Central Asia was resolved on 31 March 2025, when Kyrgyz President Sadyr Japarov and Tajik President Emomali Rahmon signed a treaty definitively demarcating the almost 1000-kilometre border between the two countries. The treaty ended decades of intermittent clashes and territorial disputes resulting from poorly defined Soviet-era boundaries. But the lack of transparency, absence of public debate and suppression of dissent — especially in the more open Kyrgyz society — cast a shadow over the agreement.
In foreign relations, Central Asian leaders maintained a cooperative approach, with regional summits, C5+1 meetings of the five presidents with foreign leaders and participation in regional bodies such as the Shanghai Cooperation Organisation and the UN General Assembly. Azerbaijan was invited to join the C5 meeting in November.
Highlights were the C5+1 meetings with Chinese President Xi Jinping in Xi’an in June and with Trump in Washington in November. The Xi’an summit concluded with the Treaty on Eternal Good-Neighbourliness, Friendship and Cooperation, while the Washington summit resulted in commercial agreements on rare earths and other products. The Central Asian agendas of the United States, China and Russia all focused on critical raw materials in 2025.
The European Union also increased its regional impact, working less spectacularly but promising substantial support for connectivity. Central Asian leaders appear to be achieving their goal of multi-vector diplomacy, balancing the influence of external great powers while Russia remains distracted by its war in Ukraine.
The connectivity focus has been on the Middle Corridor of railway lines connecting China and Europe through Central Asia and across the Caspian Sea to Baku. The wider aim is to reduce dependence on Russian Railways, which is under EU and US sanctions. Upgrading Middle Corridor infrastructure is supported by substantial EU funding of up to 18 billion euros (US$21 billion).
China is providing most of the funding for a railway line linking Kashgar, China’s westernmost rail hub, to Uzbekistan through Kyrgyzstan, whose construction began in 2025. The Trump Route for International Peace and Prosperity will facilitate transport between Baku and Turkiye, bringing Armenia into the Middle Corridor and reducing Georgia’s role.
Though the Middle Corridor focus is on transit trade, promising substantial transport revenues for Central Asia, improved connectivity will also reduce international trade costs and support the countries’ goal of export diversification. Exports remain heavily concentrated in primary products — oil and gas, cotton, minerals, fruit and vegetables — even though public policy has for some years focused on diversification.
The more cooperative Central Asian approach has become more clearly led by the two largest countries: Kazakhstan, with by far the largest economy and highest per capita income, and Uzbekistan, with the biggest population. They are also the two key Middle Corridor participants. Kazakhstan has the best transport infrastructure and borders both China and the Caspian Sea.
Though Uzbekistan is double-landlocked — it is necessary to cross at least two countries to reach an ocean port — it has a central position, bordering all four other Central Asian countries and Afghanistan. Though neither country is democratic, Kazakh President Kassym-Jomart Tokayev and Uzbek President Shavkat Mirziyoyev both appear to understand the global economic and political context better than their Soviet-era predecessors.
Living conditions have improved across the region over the last half-century, though rural–urban inequality remains and elites continue to reap disproportionate economic and political benefits. Still, many of the region’s challenges are not those of stagnation but of success — a major problem, at least in the largest cities, is traffic jams.
Richard Pomfret is Professor of Economics Emeritus at the University of Adelaide and Adjunct Professor of International Economics at the Johns Hopkins University SAIS Europe, Bologna.
This article is part of an EAF special feature series on 2025 in review and the year ahead.
