ArmInfo. Participants of the financial market of Armenia have revised their forecasts on inflation saying it will decline to 2.8% in average versus earlier forecasted 3%, according to the results of opinion poll of participants of the financial sector, which were presented in the CBA's Monetary Policy Program for Q4 2016. This was ensured mainly due to insurance companies whose inflation expectations are now 2.7% versus earlier expected 3.7%. At the same time inflation expectation of banks and loan companies have remained almost unchanged on the level of 2.5% and 3.3% respectively. Households have also softer inflation expectations awaiting 0.9% versus previously forecasted 1.2%.
According to the source in Q3 interest rates kept falling on the financial market influenced by continuing mitigation of monetary loan terms by the regulator. Particularly, assets attracted and invested in foreign currency and AMD dropped in prices. Long-term bonds demonstrated significant decline in yield on the market of state bonds. In Q4 participants of financial market also expect drop of interest rates. According to the poll results financial system expects gradual decline of interest rates of both invested and attracted assets.
According to the Central Bank conduct of efficient monetary credit policy will help to gradually neutralize deflation climate in the first months of 2017.
According to the CBA average interest rate of loans in AMD was formed at 17.25% in September 2016 (versus 17.88% a year before and 16.66% in previous quarter), while rate of deposits in AMD -11.76% (versus 14.06% in previous year and 12.81% in previous quarter). To note, in its report IMF forecasts decline of prices by 0.5% in Armenia by the end of 2016. The state budget of Armenia fixed 2.2% GDP growth in 2016, deflator index - 4%, 12- month inflation - 4% (+1.5%). According to the National Statistical Service of Armenia in Jan-Oct 2016, the economic activity growth in Armenia slackened to 0.4% from 3.5% in Jan-Oct 2015. Deflation of prices totaled 3.1% in Jan- Oct versus 2.4% deflation in Jan-Oct 2015. In 2015 growth of GDP in Armenia slackened to 3% versus 3.6% in 2014. At the same time in 2015 0.1% deflation was registered versus 4.6% inflation in 2014.