ArmInfo. Central Bank of Armenia (CBA) has upgraded is economic growth forecast for 2016 from 2.2% to 3.2%. In 2017, the regulator forecasts a 3.5%-4.5% economic growth for Armenia, Arthur Javadyan, CBA Chairman, said in the parliament Thursday presenting the monetary policy for 2016.
Javadyan said that in the first half of 2016, the weak deflationary environment will continue, but no inflationary pressure is forecasted either inside the country or from outside. Considering the certain increase in excises, the CBA anticipates an insignificant (0.3%) inflation in the middle of the year, and by the end of the year, the prices will hike up to 4% (+/-1,5%). The reason of the low inflation is the positive forecasts for the agricultural sector, low prices for imported foodstuffs, raw materials and other goods. Javadyan said the low prices will be of temporary nature, but the CBA will wage a soft monetary policy to support the economic activity.
"I think the current situation has a favorable impact on the economic growth, as low inflation supports the consumption at a stable level after the dramatic decline caused by the falling private money transfers into the country. These factors help enterprises reduce
their expenditures and restore their competitive abilities that were affected by the Russian ruble devaluation. To keep the prices low for a longer period it is necessary to overcome the inflationary fears and the fears of the population after the national currency devaluation of the end of 2014," Arthur Javadyan said.
Nevertheless, Javadyan defined both short-term and mid-term risks connected with the appreciation of the dollar and sharp currency fluctuation on the developing markets. He did not rule out that risks may emerge inside the country with the restoration of the domestic
demands, agricultural factors and positive trends on the market of internal investments. He said the CBA will be closely following the situation to take measures when necessary.