ALMATY (Reuters) – Rating agency Moody’s raised Kazakhstan’s sovereign rating outlook to positive from stable on Friday, citing the oil-rich nation’s economic diversification and its importance as a link in a new China-Europe cargo route bypassing Russia.
“The positive outlook reflects Moody’s assessment that material and ongoing progress in economic diversification thanks to Kazakhstan’s rising prominence as a transport and logistics hub along the Middle Corridor points to greater resiliency to economic or financial shocks which, if sustained, may be consistent with a higher rating,” Moody’s said in a statement.
The Middle Corridor is a China-Europe cargo route promoted by the West as an alternative to shipments via Russia, and it includes Kazakhstan, Azerbaijan, Georgia and Turkey.
According to Moody’s, Kazakhstan has also “stepped up efforts to establish a wider international footprint and diversify from its traditional linkages with Russia.”
These include building closer economic ties with the European Union and its members through strategic partnerships in areas such as supply of critical raw materials and green transformation, as well as with economies in the Middle East on trade, investments and infrastructure development, it said.
“Kazakhstan has also sought to diversify transportation routes for its oil exports, such as partnering with Azerbaijan to utilize the latter’s pipelines and tapping into the Druzhba pipeline to supply oil to Germany,” Moody’s said.
“Broadly, these efforts are likely to build a greater diversity of economic partners, which poses upside risks to Moody’s current assumptions about Kazakhstan’s growth potential.”
Georgian Economy Minister Levan Davitashvili told Reuters that gaps in the corridor were being addressed, working on coordination and efficiencies with partners at Tbilisi’s Silk Road Forum this week.
“Positive dynamics in cargo flows – last year we had more than 20% growth in flows – is promising,” he said.
(Reporting by Olzhas Auyezov and Felix Light in Tbilisi; Editing by Sharon Singleton and Matthew Lewis)