Due to Russia's invasion of Ukraine, the European Bank for Reconstruction and Development (EBRD) has lowered its economic growth projection for multiple countries.

"As Russia's invasion of Ukraine has had a profound impact on the economies in the EBRD regions as well as globally, growth is expected to decelerate to 1.7% in 2022, a downward revision of 2.5% points relative to the forecast made in November 2021," the bank said in its economic update for the EBRD regions.

"Growth in the EBRD regions is predicted to pick up to 5% in 2023," the report stated.

According to the EBRD, markets have been reassessing geopolitical concerns, resulting in currency pressures in the Caucasus, Central Asia, and beyond, as well as increased bond rates and therefore borrowing costs.

"Restrictions on the convertibility of the Russian rouble and limited air linkages between Russia and neighbouring countries may have an extra impact on remittances and commerce in Central Asia and the Caucasus," the bank warned.

In Armenia, the Kyrgyz Republic, Tajikistan, and Uzbekistan, remittances from Russia accounted for 5 to 30% of gross domestic product (GDP). Furthermore, Russian tourist spending in Armenia, Cyprus, Estonia, Georgia, and Montenegro used to range between 1% and 2% of GDP - only a portion of this gap is projected to be covered by tourists from other countries in the medium term.

In Armenia, GDP growth is projected at 1.5% in 2022 and 4.0% in 2023. Azerbaijan’s economic growth is projected at 5.0% this year and 2.5% in 2023. Georgia’s economy is projected to grow by 2% this year and by 4.5% in 2023.