Moody’s international rating agency believes that escalation of the NK conflict will keep negatively affecting economic development of CIS countries.

The agency stated this in the report published yesterday.

“Geopolitical conflicts also will continue to weigh on the CIS economies, mainly because of the impact of Western sanctions on Russia and the conflict in eastern Ukraine but also due to the flare-up of aggression between Azerbaijan and Armenia. Օnly Belarus and Kazakhstan are not engaged in a military conflict or border dispute with a neighbor,” the report reads.

The agency gives negative outlook to CIS region in 2017, conditioned by subdued economic recovery and considerable external vulnerabilities, such as high foreign currency debt and the likelihood that political considerations will delay structural reforms that would bolster potential growth.

Moody’s forecasts median growth to be 2% in 2017 and further to raise to 3% in 2018. In the meantime, this year Russia is projected have modest GDP growth of 1% after two years of recession.