A. Javadyan: In 2018 real GDP growth is forecasted at 5.5% and the main drivers will be the services sector and the industrial sector

ArmInfo. According to the forecasts of the Central Bank of Armenia in 2018, the real growth of Armenia's GDP will be 5.5% and the main drivers will be the services sector and the industrial sector. This was announced by the head of the Central Bank of Armenia Artur Javadyan on October 30, speaking at the discussion of the draft state budget for 2018 in the permanent parliamentary commission on financial and credit and budget issues.

He explained that this will be due to both external development, in particular, the restoration of Russia's GDP growth and the maintenance of a high level of international copper prices, and domestic - thanks to the implementation of a number of reforms in Armenia in 2017, and the continuation in 2018 of interest rates as a result extended monetary policy. "It is noteworthy that in 2018 the improvement of the investment environment will be accompanied by a long-term stimulation of injections into export-oriented production, and in the public and private sectors growth in investment activity is expected, and in the private sector it will be higher," Javadyan added.

According to him, the budget deficit in GDP is projected to be 2.7% in 2018, compared to the expected 3.6% in 2017. "This is a prerequisite for stabilization of the state debt and its gradual reduction: fiscal consolidation will continue in 2018 by neutralizing revenues and containing expenditures, and the ratio of tax revenues to GDP will grow only 0.1 percentage points in 2018 and reach 21.3%", he remarked.

Thus, according to the estimates of the Central Bank, the implementation of the state budget program in 2018 will have a restraining effect on gross demand, under which the main burden on ensuring economic growth falls on large-scale structural reforms. "This, accompanied by ensuring the duration of fiscal policy, will contribute to macroeconomic stability, creating the basis for economic growth in the long term," he explained.

Regarding the forecasts for 2017, A. Javadyan noted that in the first half of 2017 the economic growth in Armenia was 6% and it is expected that by the end of this year it will be possible to significantly exceed the forecast of GDP forecasted by the government and the GDP growth by 3.2%. The main driver will be the proposal formed by the industrial sector and the sphere of services. "The rapid restoration of gross demand was facilitated by the growth of both external and internal demand, which was due to the recovery in the growth rates of private consumption and private investment, which was facilitated by a gradual decrease in lending rates and an increase in lending due to expanded monetary policy. Their infusion into export- oriented production and this in turn has improved the dynamics of export volumes, "he said.

A. Javadyan added that the ratio of state budget expenditures to GDP by the end of 2017 will be reduced to 25.9%, compared to 28% a year earlier. The deficit of the state budget in GDP will make up 3.6% at the end of 2017, losing 2 percentage points to the indicator of a year ago. As a result, the impact of fiscal policy on gross demand in 2017 will be deterrent. The ratio of state debt to GDP will be 55%.

In medium term prospect, in order to ensure stable economic growth and promote exports as the main lever for GDP growth, in its policy for 2018 the government will retain a priority on restoring relatively high rates of infrastructure reform and GDP growth.

According to the IMF forecast, Armenia's GDP growth in 2017 will be 3.5% with a slowdown in 2018 to 2.9%. According to the World Bank forecast, the GDP growth in Armenia is expected to be 2.7% in 2017, with the acceleration of the rate in 2018 to 3.1%, in 2019 - up to 3.4%. According to the forecast of the EDB in 2017, the GDP of Armenia is expected to grow by 2.9%, the Asian Development Bank - by 2.2%.  Fitch improved the forecast for GDP growth in Armenia in 2017 from the previous 2.1% to the current 3.4% with an acceleration to 3.6% in 2018. The state budget of Armenia for 2017 laid the GDP growth by 3.2%, but the government voiced a 5% growth. According to the August forecast of the Central Bank of Armenia, the GDP growth of Armenia in 2017 will be 3.9-4.8%. According to the National Statistical Service of Armenia, the GDP growth of Armenia slowed to 0.2% in 2016 from 3.2% in 2015, and in January-September 2017 - 5.1% per annum (against 1.6% in the same period in 2016). The foreign trade turnover of Armenia in 2016 grew by 7.4% per annum, due to the growth of exports by 20% and the release of imports from the recession by 1.6% growth. Armenia's foreign trade turnover in January-September 2017 increased by 21.7% per annum, due to the growth of exports by 19.1% and imports - by 23.2%. A year earlier, in January-September 2016, Armenia's foreign trade turnover increased by 5.7% due to an increase in exports by 19.6% with a drop in imports by 0.8%.