IMF improved forecast for Armenian GDP growth to 3.2% from previous 2.25-2.5%

ArmInfo. IMF has improved its forecast for GDP growth in Armenia in 2016 to 3.2% with further acceleration in 2017 to 3.4%. In its previous forecast IMF expected 2.25-2.5% GDP growth in Armenia in 2016. Besides, IMF forecasts positive dynamics of prices for Armenia, which at year end of 2016 will drop by 0.5%, according to the new IMF economic outlook presented on October 4 in Washington on the threshold of annual meeting of IMF and WB executive boards.

The IMF has also improved its forecast for Russia's GDP dynamics in 2016. Now, it expects Russia's GDP to decline by 0.8% in 2016 versus previously forecasted 1.2% and to grow by 1.1% in 2017, versus previously forecasted 1%. The IMF calls the continuing economic recovery in Russia as one of the key events in the global economy, which required adjustments in the previous report of IMF that was released in April. In other comments to the figures it is stated that the increase in oil export revenues due to the strengthening of oil prices, brings some relief to exporters of oil and especially to the Russian economy. Nevertheless, the prospects for growth in Russia in 2017 and in the following years remain suppressed in particular due to the impact of sanctions on productivity and investment, the IMF experts note. As for the oil price, according to the report, in 2016 the average price will reach $42.96 per barrel, and in 2017 it will grow to $50.64 per barrel.

The IMF has improved GDP forecast for 2016 in CIS countries expecting 0.3% decline versus early forecasted 1.1% decline. To note, IMF includes Georgia, Turkmenistan and Ukraine in the CIS due to their geographic location and economic similarity. According to the authors of the document improvement of figures in the region is caused mainly due to strengthening of oil prices.

The IMPF traditionally presents the countries of the region in two subgroups-exporters and importers of energy resources. In the first group Uzbekistan (+6%) and Turkmenistan (+5.4%) are leading by the rates of economic growth in 2016 and 2017. The remaining countries of the subgroup are still in negative dynamics.  Russia and Kazakhstan-0.8% drop of GDP for 2016 and in Azerbaijan-2.4%. For 2017 the IMF experts forecast resumption of growth in Russia by 1.1%, in Kazakhstan by 0.6% and in Azerbaijan-1.4%.

Among the importers of energy resources the most optimistic forecasts were given for Tajikistan (6% and 4.5% GDP growth in 2016, 2017), as well as Georgia (3.4% and 5.2% respectively) and Armenia (3.2% and 3.4% respectively). Forecasts for Kyrgyzstan (2.2% and 2.3% GDP growth in 2016-2017), Moldavia (2% and 3% respectively) and even for Ukraine (1.5% and 2.5%) are positive. Decline still continues in Belarus-by 3% and 0.5% in 2016 and 2017 respectively.

As for the inflation, the highest figures within the group are forecasted in Ukraine (15.1%), followed by Kazakhstan (13.1%), Belarus (12.7%) and Azerbaijan (10.2%). Armenia on the contrary will experience drop of prices by 0.5% by the end of the year. The International Monetary Fund (IMF) also improved the inflation outlook for Russia to 5.9% in 2016 and 4.9% in 2017. The new outlook is much better than July expectations of the IMF, which accordingly totaled 6.6% for this year and 5.2% for 2017. 

To recall, the state budget of Armenia fixed 2.2% GDP growth in 2016, a 12-month inflation  - 4% (+-1.5%). 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 but in the next November program it will possibly revise forecast towards slackening. According to the statistical data economic activity in Jan-Aug 2016 grew by 2.4% y-o-y versus 3.9% growth in the same period of 2015 mainly due industry (7%) and services (8%).