Transport corridors to increase investments in Azerbaijan, Fitch Solutions notes

"The new and existing trade corridors will be a significant area of investment growth in Azerbaijan in the next decade, Azernews reports, citing the report of Fitch Solutions (FS).

Analysts at FS believe that the development of significant trade infrastructure along the North-South and East-West corridors can increase state revenues from exports and transit payments.

It is noted that the Russia-Ukraine war has led to renewed global interest in the East-West trade route, connecting Central Asia and the Caucasus to Europe via the Middle Corridor.

"The World Bank predicts that trade volume along the Middle Corridor will triple by 2030. Azerbaijan, due to its Caspian Sea coast, will play a vital role in connecting Central Asia to the Caucasus and then to Europe through this trade route."

Additionally, Russia is interested in improving infrastructure along the North-South corridor to increase trade with Iran and expand southern exports.

"Indeed, from March 2023 to February 2024, rail shipments between Azerbaijan and Iran increased by 28%, and imports from Russia to Azerbaijan also increased by 16% annually, reaching 3.2 billion US dollars. Azerbaijan's strategic geographic position between East and West, North and South, appreciates its geopolitical position as the chair of the Non-Aligned Movement."

The FS statement also notes that changes are expected to increase the capacity for transportation between China and the European Union fivefold via the Middle Corridor.

"We predict that despite a previous 3% decrease in fixed capital, investment will increase by an average of 6.3% annually over the next five years."