IMF forecasts GDP growth in Armenia to 2.9% by 2017

ArmInfo. The International Monetary Fund (IMF), considering the level of economic activity recorded in Armenia in the first quarter of 2017, predicts GDP growth to 2.9% by the end of the year. The head of the IMF mission for Armenia Hossein Samiei told journalists on April 12 in Yerevan.

"Starting from 2014, Armenia's economy is under the influence of external negative shocks," Samiei said after studying the general state of the country's economy. In particular, the volume of transfers entering the country has decreased significantly, and the prices for the main product exported from the country - copper concentrate - have fallen sharply in the world market. This led to a decrease in the country's balance of payments and the solvency of its citizens. As a result, there was a decrease in the level of both domestic consumption and local investment. "Taking into account these factors, the GDP growth in 2016 was only 0.2%, which was accompanied by the growth of social inequality and deflationary pressure," he said, adding that in total, all these circumstances had a negative impact on the country's budget revenues.  However, The IMF notes positive signals in the Armenian economy and hopes for structural reforms. And currently, he said, the increase in the forecast is also due to a higher level of tax collection, an increase in transfers to the country and an increase in the price of copper in the world market. High expectations, in addition, are due to higher than planned in December 2016, the level of implementation of capital programs funded from external sources. In the absence of financing, growth would have been projected at 2%, he said.

Meanwhile, according to Samiei, Armenia is quite capable of improving the forecasted indicators to 4%, and even to 6-7%, if it improves the competitive conditions in the country, as a result of which it will be able to activate the economy. "Thus, we believe that in 2017 economic growth will be fixed to 2.7-2.9%, and inflation by the end of the year will approach the 2% mark," Samiei said.

At the same time, in the annual context, the head of the mission did not rule out the occurrence of risks. He recalled that as early as the beginning of 2016, there were positive expectations regarding the economic growth in Armenia. However, following the results of the last two quarters of 2016, there have already been negative trends, as a result of which almost zero economic growth was registered.

According to the state budget of the Republic of Armenia, economic growth in 2017 is planned at 3.2%, nominal GDP growth is within 5%, with a deflation index of 1.7% (against 2.4% in 2016), a deficit of 150.1 billion AMD. The profitable part of the state budget of Armenia in 2017 will increase to 1 trillion.  210 billion AMD, expenditure - to reduce to 1 trillion. 360 billion, the ratio of income/GDP - 22.4% (against income/GDP - 21.8% in 2016). According to the latest data, the Central Bank of Armenia improved its economic growth forecast for 2017 to 3.2-4.4% from the previously forecasted 2.2-3.2%. The World Bank in January forecast laid the GDP growth of Armenia in 2017 by 2.7%. EDB expects GDP growth of Armenia in 2017 by 2.9%. Fitch forecasted the growth of Armenia's GDP in 2017 by 2.1%, with acceleration to 3.1% in 2018, the United Nations, to 2.7%, and ADB - 2.2%.