Thursday, December 12 2013 20:29
Armenian CB forecasts 7% reduction of private investment for Q1 2014
ArmInfo. Central Bank of Armenia has revised the outlook for private investments from positive to negative. Namely, it forecasts a 7% reduction of the private investment growth for late 2013 and Q1 2014 instead of the earlier forecasts of 1% growth, according to the monetary policy of the Armenia CB for Q4 2013. The forecasts are based on the investment activity for Q3 2013 that was weaker than expected (the construction sector also suffered decline for the given period). In the mid- term outlook, the construction scales will be recovering in the country along with a sluggish growth of private investments. This will ensure the economic growth predicted for the given period.
The CB also reduced the forecasts of the private consumption growth for late 2013 and Q1 2014 to 2.7% instead of the earlier predicted 4.6%. Private consumption growth will slacken along with the slackening growth of agricultural produce and lending to economy sectors, as well as rising electric power tariffs. Starting Q2 2014, the private consumption growth will speed up and reach 4.5%-5% by late 2014 due to significant growth of salaries in the government sector and pensions.
The CB anticipates dramatic decline of private sector spending by late 2013 and for Q1 2014 (by earlier forecasts of the CB, the private sector expenses were to growth 4.7%). Nevertheless, the CB forecasts no essential changes in the aggregate demand growth rates. However, in the mid-term outlook this indicator will increase amid expanding fiscal policy. In such situation, the private sector expenses for Q1 2014 will have a restraining effect in inflation - 0.9-1 pp. Following the growth of the government sector expenses starting the second half of 2014 the private sector's inflation pressure on the consumer market will total 0.4-0.5pp. However, starting Q2 2015, this indicator will be zeroed and neutralized in future.
By data of the CB, the annual growth of private consumption in Armenia for Jan-Sept 2013 totaled 2.5%, private investments grew 9% due to reduction of value added in the construction sector.
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