Wednesday, June 25 2014 16:57
Central Bank qualifies investment activity in Armenia in 2014 as weak despite the expected improvement
ArmInfo. The Central Bank of Armenia (CBA) qualifies the investment activity in Armenia in 2014 as weak despite some expected improvement. In this connection, the CBA has changed its forecast for growth of private investments for the current year. The monetary policy program of the CBA says that in Q1 2014 the investment activity was weaker than expected, and this is proved by the CBA surveys and the decline registered in construction over that period. Thus, the CBA has adjusted the growth of private investments for 2014 in its monetary policy program.
According to the CBA's new forecast in the monetary policy program for Q2 2014, private investments in the country's economy will undergo no tangible changes as compared with 2013. The previous forecast said that the private investments in 2014 were to rise by about 4%. In 2015-2016 alongside with stabilization of the construction sector and implementation of a number of private projects, private investments will moderately grow by 3-4%, which will allow ensuring the targeted economic growth for that period. "The economy of the country has risks concerning investment growth due to introduction of the accumulative pension system, which will contribute to considerable growth in aggregate national savings and, as a result, growth in private investments", says the source.
The CBA also expects the aggregate demand growth to decline in 2014. According to the CBA's monetary policy program, the aggregate demand growth at the yearend 2014 will make up 5% versus the previously expected 6.1%. Nevertheless, the CBA considers that growth to be overestimated. Starting from 2016, the growth rates will slow down and stabilize in compliance with the economic growth alongside with weakening of the effects of of the CBA's expanding policy.
The forecast of the private consumption growth for 2014 has been reduced from 5.3% to 4.6% versus the 1.8% growth registered in 2013. The targeted acceleration of private consumption growth rates in Q2 2014 will ensure high private consumption in early 2015. In 2015-2016 the CBA expects the private consumption growth rates to stabilize at 4%.
Given the abovementioned expected dynamics of private investments and consumption, the CBA expects the private expenditure growth rates to accelerate to 4.5%, with further stabilization at 4% in late 2014. As a result, the recessionary gap will be retailed in 2014 and will be zeroed only at the end of the year.
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