Armenia`s Central Bank improves its economic growth forecast for 2016 to 2.7%-3.6% from previously forecasted 1.5-2.6% due to upwards trends in industrial and service sectors

ArmInfo. Central Bank of Armenia (CBA) has improved its economic growth forecast for 2016 to 2.7%-3.6% from previously forecasted 1.5-2.6% due to upwards trends in 
industrial and service sectors, according to the Monetary Policy Program of CBA for Q2 2016. However starting from 2017 the CBA expects acceleration of economy growth rates due to efficient implementation of the governmental program on stimulating the investments and export, gradual improvement of external economic 
situation and influence of the conducted structural reforms, as a result of which the economy growth may reach 3-4.5% by the end of 2017.

In the industrial sector, 3.2%-4% growth is forecasted versus the previously forecasted 1.3%-2.1% for 2016. The construction sector growth forecasts were reduced to negative 0.8% to 0.4% (versus previous negative 0.8% to 0.2% ). The forecasts for the agricultural sector was left almost unchanged - 4%-5% versus 4.2%-5%. In addition, the CBA forecasts slower reduction of the volume of private money remittances to Armenia to 6%-8% versus previously forecasted 9%-12% 
(in terms of USD). The regulator explains this with the slacking economic decline in Russia and neutralized expectations of the ruble devaluation. The current account deficit to GDP ratio will be at 1%-2% and will reach 2%-3% in the short- term outlook versus earlier forecasted 3%-4%.  

To recall, International Monetary Fund (IMF) has upgraded its forecast for Armenia's economic growth in 2016 to 2.25-2.5% versus earlier forecasted 2.2%. World Bank forecasts a 1.9% (vs previous 2.5%) GDP growth for Armenia in 2016, and 2.8%-2.9% in 2017-2018. EBRD forecasts economic growth to 2% in 2016. The Central Bank of Armenia revised its economic growth forecast for Armenia in 2016 from the previous 1.5%-2.6% to 2.7%-3.6%, in its monetary policy program for Q2 2016. The state budget of Armenia fixed 2.2% GDP growth in 2016 - 4%, a 12-month inflation  - 4% (+1.5%). According to the National Statistical Service of Armenia GDP growth in Armenia in 2015 totaled 3% versus 3.5% in 2014. According to the 
statistical data economic activity in the first half of 2016 grew by 4.7% y-o-y versus 4.2% growth in the same period of 2015.    

To note the inflow of transfers of physical entities to Armenia dropped by 24% in 2015 to 1.6 bln USD, amid 16% decline of the outflow to 0.8bln USD.  Russia accounts for 63% and 37% of the inflow and outflow of private money transfers, respectively.  The difference between the inflow of transfers to Armenia from Russia and the 
outflow from Armenia to Russia started shrinking since 2014 (down 13%), whereas over the previous four years it experienced growth: in 2010 - $942 mln (+24%), in 2011 - $1.2 bln (+25%), in 2012 - $1.4 bln (+18.2%), in 2013 - $1.5 bln (+7.2%).  Over the past two years, the inflow of transfers from Russia to Armenia fell by almost $730 mln (in 2015 alone - by $554 mln) to $1.002 bln versus a less tangible decline in the crises- affected year 2009 (by $512 mln).