ArmInfo. The growth of the Armenian economy again accelerated after a pause in August-September 2018. The economic activity index returned to growth in October (by 3.0% y-o-y) after decreasing by 0.2% a month earlier. This is stated in the November Macroeconomic Review of the Eurasian Development Bank (EDB).
According to analysts of the Bank, due to strong growth in the first half of January-October, the y-o-y growth of the economic activity indicator remains at a fairly high level and amounts to 6.0%. The indicator is in line with the EDB forecast, which implies real GDP growth in 2018 at the level of 5.8%. The main factor leading to the growth in economic activity in October was the acceleration of industrial production growth. At the same time, the recession deepened in agriculture, which can be explained by unfavorable weather conditions during the current year.
In October, the acceleration of growth in industry was ensured, mainly due to an increase in electricity production, which grew to 20.6% y-o-y. Food production growth accelerated to 25.1% after rising 14.0% y- o-y in September. Recovery in output is also observed in metallurgy, where growth in October was 3.0% y-o-y after a decline of 8.3% y-o-y a month earlier.
The composite leading indicator, calculated by the EEC, indicates a slowdown in the growth of the Armenian economy in the short term. Lower than in the first half of 2018, GDP growth can be observed due to the relatively weak dynamics of domestic demand, which is indicated by figures of retail sales and construction activity, as well as due to the fact that growth in industry is concentrated in a limited number of industries.
In October, consumer price growth in the country fell to 2.8% y -o-y from 3.5% in September. The decline was due to a slowdown in food inflation. Given the stability of the growth rates of prices for non-food products and services, the Central Bank of Armenia expects inflation below 4% of the target level for most of 2019-2021 with inflation reaching the target level only at the end of the forecast period. The CBA Governing Board left the refinancing rate at 6% following the meeting held on November 13. Thus, the rate of the Central Bank remains unchanged for 21 months in a row.
The foreign trade deficit in January-October 2018 amounted to $ 2.014 billion, an increase of 36% compared with January-October 2017. The growth of the trade deficit in 2018 reflects, in particular, the increase in the cost of energy imported by Armenia. In the conditions of stopping the rise in oil prices in the fall of the current year, the rise in the value of imports and, accordingly, the trade deficit slowed down in September - October. In January - October 2018, the state budget of the country was executed with a deficit of 34.8 billion drams. For comparison, the budget deficit in January - October 2017 was 127 billion drams. Improving the state of public finances in 2018 was achieved due to both an increase in budget revenues compared with last year and a reduction in budget expenditures.