Friday, July 7 2017 15:13
Karine Melikyan

The Central Bank improved the forecast for GDP growth in 2017 to 3.3-4.8% and expects inflation in the region of 2.5%

ArmInfo. The Central Bank of  Armenia has improved the forecast for GDP growth in 2017 to 3.3-4.8%  and expects inflation in the region of 2.5%. At the same time, the  Central Bank did not change the medium-term forecasts for GDP growth:  in 2018 - 2.7-4.5%, in 2019 - 3.1-5.2%.  The previous forecast of the  Central Bank laid the GDP growth in 2017 by 2.2-3.2%, with  acceleration in the medium term to 3.2-4.4%. Head of the Central Bank  of Armenia Artur Javadyan stated this today in the National Assembly  of Armenia, presenting the updated monetary program, explaining that  the drivers of economic growth will be the industrial sector and the  agricultural sector, positive trends in private consumption and  investment.

In terms of the industrial sector, the Central Bank predicts an  increase of 7.2-8.4% in 2017, with stabilization in the range of 6-7%  in 2018-2019. The agricultural sector is projected to grow by  3.6-4.4% in 2017 with an acceleration to 4.5-5.6% in 2018-2019.  In  the service sector, growth is expected in 2017 by 3.4-4% with a  slowdown to 2.8-3.7% in 2018-2019. The construction sector in 2017  will be in decline - 1,8-2,5% with an output in 2018-2019 for a  similar growth of 1,8-2,2%.

He noted that GDP growth will accelerate, mainly due to the  restoration of domestic demand, the effective implementation of  government programs to stimulate exports, the continued improvement  of the external economic environment, and the implementation of  structural reforms.

In the structure of domestic demand, private consumption in 2017 will  grow by 4.3%, and private investment - by 6%. The high growth of  domestic demand will partially neutralize the impact of the decline  in external demand. In 2017, the fiscal policy, according to the  forecast of the Central Bank, will have a three-percentage point  constraint on gross demand. As for exports in 2017, the Central Bank  expects an increase of 3-5%, and imports - 4-6%.

According to him, the decline in deposit and lending rates will  continue. "True, because of the risks coming from the real sector,  the rate of decline in loan rates has slowed somewhat, but this is  only a temporary phenomenon." In parallel, other loan conditions are  alleviated: maturity, payment schedule, deferred payment.

Concerning the Central Bank's interventions in the foreign exchange  market, A. Javadyan noted that over the past 2 months, the Central  Bank has only bought up the currency in order not to allow the drama  to become much stronger. "Recently, the IMF touched upon this issue  and suggested, in parallel with the policy of a floating exchange  rate, to carry out some regulation," he added.

"The macroeconomic policy of the Central Bank is highly valued by  international structures, it occupies leading positions in the  region, CIS countries and Eastern Europe.In the peak of the  international financial crisis in 2009, in parallel with that in  March of the same year, dram dramatic devaluation occurred,  dollarization increased from 40% to In 2014, the level of  dollarization in commercial banks dropped to 72%, followed by a  decrease to 66.34% in 2016, and to the present 65.3%, which indicates  an increase in the confidence of depositors in the national currency.  Trillion drams, from 2.5 trillion - credit investments, the share of  non-performing loans in banks' assets is 6.5%, there is an opinion  that Armenia lives at the expense of international loans, but this is  not so.International loans account for only 9%, and 91% generated  funds of physical and Legal entities, "A. Javadyan explained the  situation.

It should be noted that according to the IMF forecast, Armenia's GDP  growth in 2017 will be 2.9%, according to the WB forecast - 2.7%,  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 Armenia's GDP is  expected to grow by 2.9%, 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 updated  forecast of the Central Bank of Armenia, the GDP growth of Armenia in  2017 will be 3.3-4.8%. According to the National Statistical Service  of Armenia, Armenia's GDP growth slowed to 0.2% in 2016 from 3.2% in  2015.


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