EM Europe and CIS: Select Country Risk Ratings

Azerbaijan (AZE)

Azerbaijan’s overall risk rating remains at a medium-high level. While the Political Violence and Legal & Regulatory risks are still categorized as high, the threat of large-scale conflict with Armenia has reached its lowest point in decades in 2026. This follows the August 8, 2025, peace declaration brokered by the U.S., which initialled a framework for the Trump Route for International Peace and Prosperity (TRIPP)—a 43km transit corridor through Armenia's Syunik province. Despite the progress, Political Interference remains medium-high as implementation of the peace deal faces hurdles, notably Azerbaijan’s demand for Armenian constitutional changes, which are currently slated for a 2027 referendum. President Ilham Aliyev, entering the third year of his fifth term, maintains a dominant domestic position, though regional tensions with Iran—which views the TRIPP corridor as U.S. encroachment—continue to necessitate high security vigilance. The economic narrative for early 2026 is one of decelerating growth and sticky inflation. GDP growth slowed to an estimated 1.4% in 2025 (down from 4.1% in 2024), with a modest recovery to 2.5% projected for 2026. This slowdown is primarily due to maturing oil fields; oil exports in January 2026 were 23.6% lower in volume compared to the previous year. While inflation eased to 5% in late 2025, the annual inflation rate edged up to 5.7% as of January 2026, driven by high food and service prices. The Risk of Doing Business remains at a medium level, and Exchange Transfer risk is medium-low, supported by the stability of the Manat. However, the legal environment remains a concern for Western investors due to lingering issues with transparency and the state's large footprint in the economy. Banking sector’s vulnerability remains medium-low since the system is stable but characterized by low competition and high operating costs. Supply chain risk remains at a medium level. While the TRIPP corridor promises to turn Azerbaijan into a primary Middle Corridor hub bypassing Russia and Iran, actual throughput gains await the commencement of construction, targeted for late 2026. Azerbaijan's economy still relies on oil and gas exports, and it appears any fluctuations in global energy prices can impact economic performance.

Georgia (GEO)

Overall risk in Georgia remains unchanged at a medium level. Georgia continues to face elevated levels of political risk due to deep polarization and the ongoing loss of democratic standards since the nations disputed October 2024 elections. The Georgian Dream Party continues to hold political power following the oppositions accusation of alleged fraud in the 2024 elections, which has sparked a series of mass protests. Political violence is assessed as medium high. In retaliation to reoccurring protests, the ruling Georgian Dream Party has proposed various laws that would increase penalties for protesters. Georgia’s relations with the EU remain uncertain since the EU halted the country’s accession process in 2024, despite candidate status being granted in December 2023. Amid concerns over democratic backsliding and deepening economic ties with Russia since the outbreak of the Ukraine-Russia war, Britain and 23 other OSCE members have put forward an examination of Georgia’s deteriorating human rights situation following the abolishment of Georgia’s anti-corruption body. Therefore, legal & regulatory risk and political interference remain medium.

According to the IMF, GDP growth is projected to slow down to 5.3% in 2026 and to 5% in 2027. Robust growth is expected to be supported by the economic drivers of tourism, transport and manufacturing. Tourism, in particular, made up for 15% of Georgia’s GDP in 2024 and is set to continue into 2026, as Georgia has been named among the best travel destinations for 2026. In addition, inflation is estimated to reach the National Bank of Georgia’s target of 3% in 2027, with the IMF currently forecasting a 3.4% rate for 2026. The Central Bank’s conservative policy stance is set to continue into 2026, as the 8% policy rate was held in the recent December 2025 meeting. The risk of doing business and banking sector vulnerability both remain assessed as medium low. The government debt to GDP is set to remain stable, with the IMF forecasting 33.4% in 2026 and 33.6% in 2027. Therefore, sovereign non-payment risk stays assessed as medium. Lastly, the Georgian Lari (GEL) had appreciated modestly against the USD in December 2025, demonstrating notable stability and benefitting from strong foreign exchange inflows. Exchange transfer risk remains medium high, as Georgia’s political unrest continues.

Kyrgyz Republic (KGZ)

The landlocked nation of Kyrgyzstan has had no alteration to its overall risk of high. Sadyr Japarov, a populist and nationalist, has officially held his role as president since his landslide election victory in January 2021. President Japarov continues his efforts to crackdown on political dissent and media freedoms, with many media workers being detained for allegedly inciting unrest, along with a bill approved by parliament that tightens the state’s control over media outlets. A recent snap election held in November 2025 saw allies of President Japarov win a majority of parliamentary seats available, cementing the president’s control over Kyrgyzstan. Additionally, a presidential election is scheduled for 2027. Political interference and political violence both remain medium high. The former Soviet Republic of Kyrgyzstan maintains close relations with Russia, hosting Russian military bases while also counting Russia as a major trading partner alongside China, as well as receiving vital remittances from Kyrgyz labor migrants working in Russia. The EU, however, has criticized Kyrgyzstan’s relations with Russia due to suggestions that serval Kyrgyz banks and cryptocurrency firms have facilitated illicit trade with Russia in violation of Western sanctions. Relations with neighboring Tajikistan have historically been tense due to a series of border clashes, although such disputes were resolved through a border agreement between the two Central Asian countries, putting an end to decades of intensifying conflict. Legal & regulatory risk remains very high.

Economic growth has expectations of slowing in 2026 at 5.3%, while 2027 indicates a similar rate of 5.8%. Stimulation of GDP in 2025 was triggered by the Western’s sanctions on Russia, which made Kyrgyzstan an offshore hub for many Russian companies affected by those restrictions. Construction and services are expected to maintain the country’s strong growth throughout 2026 alongside the government’s major investment to support the agro-industrial sector, agriculture and water resources. Inflationary pressures are forecasted to ease in 2026, by the IMF, to 5.5% in 2026. The National Bank of Kyrgyzstan had maintained its policy rate of 11% in its January 2026 evaluation, explaining the decision was due to elevated inflation at the start of 2026 and elevated prices in non-food goods. Therefore, the risk of doing business remains unchanged at medium high. Government debt, although low and below the unsustainability threshold of 50%, is expected to climb marginally to 38.3% of GDP in 2026 and a further 39.2% in 2027, driven by significant financing in energy and transport infrastructure. Sovereign non-payment risk is assessed at medium rating, while exchange transfer remains at a medium high risk.

Moldova (MDA)

Overall risk in Moldova remains high. President Maia Sandu and her pro-European party, Party of Action, had claimed victory over pro-Russian opposition in the September 2025 parliamentary elections, boosting Moldova’s EU aspirations. Alexandru Munteanu’s appointment as the nation’s new prime minister advances efforts to join the 27-member EU. Prior to the country’s parliamentary election, Moldova’s election authority had excluded two pro-Russian parties, one being Greater Moldova, due to suspected illegal financing and foreign funding. In addition, the Kremlin had expressed how hundreds of thousands of Moldovans living in the Russian Federation had a limited opportunity to vote in the recent parliamentary election, stating only two polling stations were available within the borders of Russia. Political interference remains medium high, while legal & regulatory risk is unchanged at high. President Sandu continues to accuse Russia of attempting to destabilize the European state, as she expresses support for unification, with its neighboring country of Romania that could protect Moldova’s fragile economy and democracy. Political violence is assessed as very high as the Ukraine-Russia conflict continues to create uncertainty.

Moldova has low-income levels, producing many economic challenges. The IMF forecast growth to remain quite subdued in 2026 at 2.2%, while a small uplift is expected in 2027 at 3.5%. The agriculture sector continues its role as a vital economic driver for Moldova, while the European Commission’s 2025 – 2027 growth plan aims to financially support the country’s transition into the EU through the speed up of necessary reforms, improving access to the EU single market and providing citizens with greater social opportunities. The EU’s growth plan includes an investment package of EUR 1.9 bln, maintaining the government’s inability to provide stimulus at medium. However, the IMF state that ‘decisive’ reforms need to be implemented to remove Moldova’s ongoing structural problems, which have become far more complicated since becoming entwined in the Russia – Ukraine conflict. Inflationary pressure has fallen since levels peaked above 28% in 2022 and is expected to reach the National Bank’s 5% target by 2027, as inflation is currently estimated to reach 5.5% in 2026. In addition, sovereign non-payment risk is showing positive signs with a medium high rating. The government’s approval of a medium-term debt management program from 2026 – 2028 will aim to maintain the country’s sustainable debt levels, while effectively financing the national budget deficit. In the meantime, the IMF project government debt to remain manageable at 39.2% of GDP in 2026 and 41% in 2027. Finally, recent power blackouts in both Moldova and Ukraine question Moldova’s reliance on electricity imports, especially from Ukraine. Therefore, supply chain disruption remains medium high, while the risk of doing business is unchanged at medium.

Russia (RUS)

Russia’s overall risk rating remains medium-high when compared to the previous risk analysis period. The war in Ukraine continues to be the primary determinant of Russia's trajectory. Political Violence remains at a very high rating coupled with security risks characterized by intensified cross-border drone attacks and sabotage targeting Russia’s energy infrastructure. Political Interference remains high and the legal & regulatory risk stands at very high as the Kremlin maintains tight domestic political control while prioritizing war mobilization. The sovereign non-payment risk is medium as the war in Ukraine continues to cause a domestic strain, creating an increasing financial burden given high military spending and fiscal support. The Risk of Doing Business remains at a medium level, hampered by a chronic labour crunch and a weak investment climate. Russia’s ranking in the Corruption Perceptions Index has further deteriorated, and the legal environment remains volatile. Exchange Transfer Risk is at medium, but heightened transfer and convertibility risks persist due to the widening web of secondary sanctions on international payment gateways. The inability of the government to provide a stimulus generates a medium level risk, reflecting a budget deficit, which grew fast in 2025. (Note: Oil and gas revenues dropped by approximately 20% in 2025 since new U.S. and EU sanctions targeting the shadow fleet and prohibiting refined products made from Russian crude in third countries (like India and Turkiye) are further squeezing export volumes). Banking sector vulnerability is medium-low as banks remain profitable and supported by the state, though they face rising non-performing loans and high borrowing costs for the private sector. On the economy front, Russia’s GDP expanded by only 0.6% y/y in 2025, representing a significant slowdown from the 4.3% yr/yr seen in 2024, as the defence industry reaches capacity limits and civilian sectors are crowded out. Inflation stood at 6.0% y/y by January 2026. While still above the 4% target, the Central Bank of Russia (CBR) unexpectedly cut the key rate by 50 basis points to 15.5% in February 2026, signalling a cautious pivot toward managing the economic slowdown. Sanctions, supply side constraints, and price pressures continue to hamper foreign investments and economic confidence. Despite high-level diplomatic probing in early 2026, a comprehensive peace deal in Ukraine remains elusive, ensuring that the war remains the central risk factor for the foreseeable future. The war will continue to be a major determinant for the Russian economy and politics in 2026.

Tajikistan (TJK)

The Central Asian region of Tajikistan continues to hold its overall rating of high. The President of Tajikistan, Enomali Rahmon, and his People’s Democratic Party of Tajikistan continues to highlight the party’s political dominance through gaining 12 of the 22 seats available in the March 2025 parliamentary elections. The People’s Democratic Party of Tajikistan has continued its centralized and authoritarian style of leadership since cementing its position in the 2000 parliamentary elections. Therefore, political interference remains high, while legal & regulatory risk is unchanged at very high. Presidential elections have been scheduled to take place in 2027; however, since a majority of political opposition has been suppressed, a possible transfer of presidency within the ruling family is likely. In terms of foreign relations, Tajik ties with Moscow appear to be developing once again, as President Putin expressed interest in solidifying their strategic partnership through several additional agreements. For example, Action Plan 2025 – 2030 was signed to increase bilateral trade volumes. U.S President Trump had called a meeting with Tajikistan and 4 other central Asian nations to expand the West’s influence in Central Asia’s resource rich region, while border skirmishes between Kyrgyzstan and Tajikistan had come to an end in March 2025 after both leaders signed an agreement finalizing the border delimitation. Political violence continues to be assessed as medium high.

The IMF indicates that real GDP growth will continue its path of stability into 2026 at 5.5% and 2027 at 4.8%. Growth is to be supported by the rising prices of gold and non-ferrous metals; capacity expansion in both energy and manufacturing sectors; while also the expansion of exports towards China. China’s Foreign Minster Wang Yi had also confirmed Chinese companies are being encouraged to invest into Tajikistan, while exportation of agricultural products to China is to develop further. Deepening cooperation could create an opportunity of expanding mineral resource development and reinforcing security throughout the landlocked country. Overall, the inability of the government to provide stimulus has remained at medium low risk and the risk of doing business remains medium high. The IMF anticipate inflation to rise to 4.5% in 2026, but remain confident inflation will stay in the national bank’s target range of 5% (±2%) throughout 2027 and onwards. Thus, government debt to GDP is forecast at 22.9% in 2026 and 23.3% in 2027. Sovereign non-payment risk, however, remains high due to Tajikistan’s reliance on Russian remittances, while exchange transfer risk is assessed at medium high.

Turkiye (TUR)

Turkiye’s overall risk level is high. Political violence and interference remain at a very high and medium-high level, respectively. In recent months, the political landscape has shifted from active protest to a state of suppressed opposition following the 2,400-year sentencing dictum of Istanbul Mayor and opposition’s presidential candidate Ekrem Imamoglu in late 2025. The era of trustees expanded in December 2025, with government-appointed administrators now overseeing several major metropolitan municipalities and some media outlets like TELE1. This has solidified Legal & Regulatory Risk at a medium-high level, as the judiciary is alleged to be increasingly used as a tool for political neutralization. Doing business remains at a medium risk level due to concerns over law enforcement and alleged political oppression. Despite political tensions, the Sovereign Non-Payment Risk and Fiscal Stimulus Inability have stabilized at a medium level. This reflects a disciplined fiscal consolidation and the successful rollover of external syndications by Turkish banks. Banking sector vulnerability remains medium-low as the banking system has proven resilient post-FATF gray list removal, though high private-sector indebtedness (particularly in the energy and construction sectors) remains a latent credit risk. Elsewhere, the tight-for-longer monetary stance adopted is beginning to yield marginal results. Despite this, inflation continues to be the core economic problem, softening to 31.4% y/y as of January 2026, while sticky service prices and a recent minimum wage adjustment in January continue to tilt risks to the upside, and the investment environment remains fragile. Supply Chain Disruption remains high. Turkiye’s geographical proximity to the ongoing conflicts in Ukraine and the Levant continues to inflate logistics costs and disrupt Black Sea trade routes. While Turkiye maintains its role as a regional energy hub, it remains vulnerable to external commodity shocks and shifts in global investor sentiment.

Ukraine (UKR)

Ukraine’s overall risk remains high, anchored by a very high risk in Political Violence. The Inability of the Government to Provide Stimulus remains high; as public debt has surged past 100% of GDP (reaching more than USD204bn in 2025). The sovereign non-payment and exchange transfer risks remain acute. Exchange transfer risk increased to very high in this rating period. As of February 2026, martial law has been extended for the 18th time, now running until May 4, 2026. This continued suspension of the democratic cycle—the presidential election originally due in 2024 remains on hold—has become a point of friction. While the domestic opposition remains largely supportive of the war effort, political interference stands at a medium-high level, exacerbated by diplomatic pressure from the Trump administration for territorial concessions in exchange for security guarantees. Having said that, the outlook for 2026 is so far dominated by U.S.-mediated peace negotiations. Reports of a 28-point plan involving a cap on Ukraine’s military and a commitment to not join NATO have created significant domestic and European anxiety. While President Zelenskyy noted in late December that 90% of a deal was potentially agreed upon, recent rounds in February 2026 ended without a breakthrough on the status of occupied territories. The political and economic outlooks remain exceptionally uncertain due to massive human and economic damage, coupled with labour shortages and Russia’s continued attacks on Ukrainian energy supply and infrastructure. Logistical and manufacturing problems linked with supply chain disruptions are slowing economic activity, which has caused the risk of doing business to stand at medium-level in this rating period. A critical constraint on recovery is the severe labour shortage—estimated that 46% of enterprises now cite a lack of workers as their primary operational hurdle due to mobilization and displacement. Banking sector vulnerability increased to medium level in this rating period while the banking system is moderately liquid and profitable, supported by international grants and the National Bank of Ukraine's stabilizing measures. Despite significant constraints, Ukrainian economy is not doing bad so far in 2026. One bright spot is the inflation rate, which fell to an 18-month low of 7.4% yr/yr in January 2026. This softening is attributed to the lagged effects of tight monetary policy and a strong 2025 harvest, though energy disruptions continue to pose significant upside risks. Despite remarkable resilience, growth slowed to just 1.6% in 2025, with 2026 forecasts dipping to 1.2% as the war enters its fifth year. On the war end, it appears a full-scale peace deal satisfying all parties will be hard to achieve in the near term without Ukraine abandoning hopes of returning to its pre-war borders and joining NATO as Russia continues to push for its pre-war requests. Even if a peace deal is brokered, the country faces a multi-decade reconstruction effort currently estimated to exceed USD 524bn. Ukraine’s trajectory in 2026 will be defined by whether it can transition from a war footing to a recovery footing without losing the vital international financial support.

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