Moody’s: AI investment to drive growth across Central Asia, Caucasus

Investments in artificial intelligence (AI) technologies could support economic growth across Central Asia and the Caucasus while significantly increasing demand for energy, telecommunications and other infrastructure, Moody’s Ratings said.

The international ratings agency said governments across the region are increasingly treating AI and digital infrastructure as new pillars of economic modernisation alongside transport, energy and logistics networks, Caliber.Az reports, citing local media. 

According to Moody’s, countries in Central Asia and the Caucasus see AI as a means of raising productivity, diversifying their economies and strengthening their global competitiveness. Successful implementation could also increase the region’s economic complexity and support broader economic transformation.

However, developing the infrastructure needed to support AI will require substantial investment in electricity networks, telecommunications, water resources and computing capacity, as well as a favourable regulatory environment.

Moody’s identified Azerbaijan, rated Baa3 with a positive outlook; Armenia, rated Ba3 with a positive outlook; Kazakhstan, rated Baa1 with a stable outlook; and Uzbekistan, rated Ba2 with a stable outlook, as the countries making the most significant progress in developing AI infrastructure in the region.

The agency said these countries are pursuing major projects involving data centres, supercomputers and digital communications networks.

Beyond the initial construction phase, such investments could support cloud services, AI applications, digital exports and locally developed AI ecosystems, while potentially increasing the countries’ geopolitical significance.

Moody’s analysts said the success of AI infrastructure development will depend on reliable energy supplies, advanced telecommunications networks, access to water and land, and sufficient computing capacity. Meeting these requirements will involve high financial costs.

Energy resources could become a key competitive advantage. Kazakhstan, Azerbaijan and Uzbekistan are leveraging their domestic resources, while Tajikistan and Kyrgyzstan are developing specialised computing opportunities based on their hydropower potential, the agency said.

Government support will also be crucial in attracting large-scale investment into the AI sector, as investors generally favour economies with transparent regulations and reliable infrastructure.

Moody’s noted that differences in institutional quality and policy implementation across Central Asian and Caucasus countries mean that the results of AI development are likely to vary.

The agency also highlighted the high capital requirements of data centres, fibre-optic networks and related energy infrastructure. Governments’ fiscal capacity to support private investment will therefore become another important factor distinguishing countries in the region.

Kazakhstan has advanced the furthest in AI infrastructure development, according to Moody’s, positioning itself as a regional AI hub through large-scale data centre construction, the creation of a national supercomputer and the expansion of domestic AI capabilities.

Uzbekistan is also attracting significant investment in data centres and linking these projects to renewable energy and preferential electricity supply conditions.

In the South Caucasus, Armenia is developing plans to invest in AI factories with international technology partners.

Azerbaijan, meanwhile, plans to combine surplus energy capacity, fibre-optic infrastructure and data centre development into an integrated digital corridor strategy, Moody’s said.

By Sabina Mammadli