Friday, April 29 2011 15:50
Armenian Central Bank forecasts annual inflation for late 2011 at 5.5%-7.5%
ArmInfo. Annual inflation will be still high in the first half of 2011 and total 9.5%, says the Armenian Central Bank's Monetary Policy for 2011. Thus, CB forecasts slackening of inflation growth rates because of reduction of inflation pressures, which will reduce inflation to 5.3% till the end of the year.
In addition, in conditions of uncertainty there is a high probability of inflation's deviation from the envisaged target ceiling. Thus, there is a 41% probability that inflation in late 2011 will total 5.5%-5.7%.
In the given forecast model the Central Bank took into account also the shocks from the supply that continued in 2011 since the end of 2010, including the unprecedented growth of prices of agricultural products in Armenia and prices of basic foods and raw materials in the global market.
To bring inflation closer to the target (4%), it is necessary to toughen the monetary conditions and simultaneously continue the measures on de-dollarization of economy. In fact, increase in the dram supply for 2011 (by 22.2%) will be more significant than increase in the money supply (16%). The monetary base will grew 12.3% in 2011. Reduction of economy dollarization will be reflected in the significant growth of dram deposits (35.2%) amid the growth of foreign exchange deposits (7.6%) versus 29% and 7% in 2010, respectively, as well as in the growth of the circulated cash in the national dram (13%), which is twice as much as last year's growth rates.
In 2011 lending to economy will be retained. Despite the anticipated high growth rates of business finance and mortgage lending, more restricted growth of lending to economy is forecasted for 2011 - 18% versus last year's 27% because of the expected toughening of the monetary conditions.
To recall, IMF forecasts 9.3% inflation in Armenia for late 2011. The National Statistical Service of Armenia reported 1.8% inflation in the consumer market of Armenia in Dec 2010, 9.4% for Jan-Dec 2010, and 8.2% for 2010 versus 2009. In March 2011 inflation totaled 0.8% (11.5% per annum), in Jan-Mar - 5.2% (11.1%).
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