Friday, October 12 2012 17:45
Central Bank forecasts 6.4% growth in private spending in 2012 and 4.1% growth in private investments
ArmInfo. The Central Bank of Armenia (CBA) expects the growth in private spending to accelerate in 2012. The CBA's program of monetary policy for Q3 2012 says that the growth in private spending will make up 6.4% against the earlier forecasted 4.6%.
In 2012 the private spending growth rates will accelerate due to the increase in private consumption and slow growth of private investments. In the meantime, the state expenditures will not change (against the earlier forecasted 0.6% decline). Under such a scenario, the aggregate domestic demand in economy will grow almost by 5.5% in real terms (against the earlier forecasted 3.9%). The CBA grounds the improvement of private spending growth forecast by an expected high economic activity for that period, as well as by high private consumption growth rates, maintenance of high economy crediting rates and the expected acceleration of the private investment growth.
The source says that the consumption growth rates in the private sector are expected to accelerate due to faster growth rates of domestic economy than expected and a comparatively low inflation environment. According to the CBA, in 2012 the private consumption growth will make up 7.1% against the earlier forecasted 4.3%. This forecast is also based on the private consumption growth in Q1 2012 and retention of high growth rates of economy crediting. In 2013 and within the mid-term outlook the growth rates of private consumption will slow down to a level meeting the economic growth expected in the mid-term outlook.
Despite the former expectations, the growth rates of private investments are expected to slow down due to the negative signals in the construction sector over the first half of 2012 and faster reduction in investments in Q1 2012 than expected. According to the CBA, the most probable growth of private investments for 2012 is 4.1% against the earlier forecasted 5.4%. In the meantime, the private investment growth rates in 2012 will yield to the pre-crisis indices, but will comparatively accelerate in 2013 and within the mid-term, outlook, ensuring economic growth for the mid-term outlook.
Despite the expected low growth of private investments, the CBA supposes that in the second half of 2012 the private spending growth rates will be higher than the average rates, as it expects high growth of private consumption. The favorable balance of private spending will be 1-1.5%. It will be zeroed in II half of 2013, which will lead to liquidation of incompliance of supply and demand in the private sector. The CBA thinks that the favorable balance of private spending will form inflationary pressure in the economy by 0.5-0.8 pct points, which will remain throughout the second half of 2012 and the first half of 2013.
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