Thursday, March 27 2014 15:21
Armenian Central Bank expects inflation in Armenia to keep declining
ArmInfo. In 2014 the 12-month inflation in Armenia will make up 2.5-5.5%. According to the monetary policy program of the Central Bank of Armenia (CBA) for Q1 2014, this year the inflation will keep dropping and in Q3 2014 it will reach the bottom of the target range.
The CBA says that the inflation reduction will mostly be due to liquidation of the impact of last July's rise in energy tariffs. In the meantime, easing of the monetary conditions, reduction of the AMD obligatory reserve rate from 4% to 2%, as well as the stimulating fiscal policy will contribute to reduction of the recessionary gap of GDP and to formation of the inflation gap in the second half of 2014. This, in turn, will stabilize the inflation within the admissible range in late 2014.
The CBA says that the beginning of 2014 was marked by uncertainties in the foreign and domestic sectors. Thus, foreign uncertainties arouse around the economic prospects of developing countries, especially, Russia. The reduction of the Federal Reserve System's quantitative easing program resulted in outflow of capital from developing countries and, subsequently, in the foreign exchange devaluation and economic growth slowdown of these countries. The uncertainties in the domestic economy are mostly connected with the recovery rates of private capital investments and the Armenian state budget fulfillment process, which may considerably influence the aggregate demand and inflation. In addition, it is not clear how Armenia's possible accession to the Customs Union may affect the country's economy.
The main risks of the inflation deviation from the forecast level are connected with the prospects of economic development of the developing countries and the development of the domestic demand. In case of such risks the CBA will take relevant measures to ensure the target inflation in the mid-term outlook.
According to the National Statistical Service of Armenia, in 2013 inflation in Armenia made up 5.6% (5.8% versus 2012). In 2013 food prices (including alcohol and tobacco) rose by 4%, non-food prices - by 3.5%, and the tariffs of services - by 9.7%. As compared with 2012, these indices grew by 5.8%, 4.6% and 6.4%, respectively.
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