Sergei Guriev: Central Asian and Caucasian countries benefit from trade mediation between major powers

Neutral countries, especially in Central Asia and the South Caucasus, are receiving economic benefits from mediating trade between major powers, despite the recent slowdown after a temporary influx of resources from Russia.

As Report informs, this was stated by the Dean of the London School of Economics and Professor of Economics Sergei Guriev during the panel discussion Regional Economic Prospects, held as part of the annual meeting of the European Bank for Reconstruction and Development (EBRD) in London.

"We are living in conditions of an ongoing trade war between the US and China, even despite the partial reduction of tariffs - from previous levels to 10% or 30%. In this situation, the countries that can maintain trade relations with both sides of the conflict win. And in practice, we already see confirmation of this," he noted.

Sergei Guriev noted that according to the EBRD analysis, some countries of the Caucasus and Central Asia benefited from the role of intermediaries in trade between Russia and the West after the introduction of sanctions in 2022-2023.

He also highlighted the short-term positive effect from the mass relocation of qualified specialists from Russia to these regions in 2022-2023. "Hundreds of thousands of Russians with human capital and financial resources moved to neighboring countries. This became a kind of supply shock, but it was a one-time event and cannot become a source of sustainable growth," the economist emphasized.

At the same time, Sergei Guriev noted that economic growth in a number of countries in the region is slowing down, including due to the decline in commodity prices, on which they largely depend. This explains the adjustment of the EBRD's economic forecasts downward.

"Nevertheless, in a strategic perspective, countries that maintain neutrality in global conflicts receive unique opportunities. This applies not only to Central Asia and the Caucasus but also to the Middle East. They can simultaneously interact with different economic blocs and perform the function of trade intermediaries. This is a positive signal for countries taking a neutral position," he concluded.