Saturday, November 22 2014 17:34
Central Bank of Armenia: Forecast for Armenia's economic growth for 2014 keeps slowing down - from 3.6-4.2% to 3.1-3.6%
ArmInfo. This year the Central Bank of Armenia (CBA) has for the third time revised the forecast for the Armenian economic growth for 2014. It expects the economic growth to slow down even more. According to the CBA's monetary policy program for Q4 2014, the economic growth of Armenia will make up 3.1-3.6% versus the previously expected 3.6- 4.2%. Earlier the CBA expected the economic growth to make up 4.1-4.8%.
The CBA's decision to revise the forecast for Armenia's economic growth is explained, first, by intensification of the negative impact of the economy of Russia - a large trade and investment partner of Armenia and, second, by slower than expected implementation of construction projects in the country. Furthermore, the CBA has reduced the forecast for the potential economic growth, which is due to both expected slowdown of capital investments from the partner countries because of the decline of their potential economic growth and low domestic investment activity. Nevertheless, the CBA expects the economic growth to approach its balanced long-term level (5-6%) within the anticipated period.
According to the specified program, the CBA reduced the forecast for the industrial sector growth in 2014 - from 1.3- 2.3% to 0.7-1.3%. In particular, the mining and metallurgy growth is expected to slow down due to the drop in global prices of non-ferrous metals. The growth rates of food industry, production of construction materials and beverages are also expected to slow down because of the deceleration of the expected external and domestic demand growth. Earlier the CBA expected the industrial growth to make up 3.7-5.2%. According to the CBA's expectations, implementation of large-scale programs in the anticipated outlook will result in stabilization of the industrial growth within 4.8-5.3%.
The CBA expects the construction growth to decelerate. According to the CBA, in 2014 the construction sector will decline by 3-3.5%. Earlier the Central Bank forecast the construction growth at 0.5-1.5% versus the previously expected 2.5-4.5%.
The new forecast of the CBA is based on higher than expected in Q3 passivity of the sector and slower than envisaged implementation of the construction projects.
In the anticipated outlook, construction may demonstrate 1% growth owing to stage-by-stage removal of the imbalance between demand and supply.
The growth of services is also expected to slow down - from 5.2-6.2% to 4.2-4.7%. This is explained by adjustment of the forecasts for domestic demand and, as a consequence, its impact on the trade turnover and other services. Before that the CBA expected the services to grow by 4.2-5.7%. In the anticipated outlook, the growth of services will be stabilized within 5.3-5.8%, which will meet the mid-term forecast for domestic demand.
The growth in agriculture is expected to accelerate due to expansion of the greenhouse facilities. The CBA says that the agrarian sector will grow by 6-6.5%. Previously the growth was expected to slow down from 4.5-6.5% to 2.3-3.3%, because the summer proved to be harvestless due to the hailstorms.
To recall, the World Bank reduced the Armenian GDP growth forecast for 2014 to 2.6%. Earlier the WB forecast Armenia's economic growth at 2.7%. The Armenian draft budget of 2015 has been prepared with due regard for 4.1% growth in the real GDP and 2.34% deficit of GDP. According to the draft budget, GDP will amount to 4,867.5 billion AMD. By the data of the National Statistical Service of Armenia, in Jan-Oct 2014 versus Jan-Oct 2013 the economic activity of Armenia grew by 4.2%.
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