CB forecast: In Armenia, by the end of 2017, inflation is expected to be 2.5-2.6%

ArmInfo. According to the Central Bank, by the end of 2017, inflation in Armenia is expected to be 2.5-2.6%. This was announced on October 30 by the CBA head Arthur Javadyan in an interview with the journalists in the National Assembly of Armenia after discussing the draft budget for 2018 in the permanent parliament on financial and credit and budget issues.

He said that for the second time in 2016 a deflation of 1.1% was registered, against 0.1% in 2015 which effected badly on economy the growth of which slackened to 0.2% from 3.2% in 2015. The CB by the means of monetary tools supports economic growth and further inflation as the deflation as show the results of 2016. "In the foreign exchange market, the Central Bank since the beginning of 2017 to this day has bought currencies for more than $ 100 million, supporting economic growth by monetary instruments and to some extent contributing to inflation. In addition, the Central Bank conducts an expanded monetary policy, as evidenced by the revision of the refinancing rate downward over the past two years more than 14 times, to today's 6%, which lowered lending rates and increased lending, and this ensured stable economic growth", he explained adding that during last 15 years average annual inflation level did not extend 3% which corresponds to the best world standards.

The CB Head also informed that in Jan-Oct 2017 the transfer inflow grew by 15% y-y. By the money transfers of individuals, the CB reviewed the 2017`s growth forecast in the direction of the slowdown from the previous 14-16% to current 12-14% and this updated limit, the regulator explains by the slow recovery of the Russian economy.

According to the National Statistical Service of the Republic of Armenia, the deflation of 1.1% in 2016 was mainly caused by a decrease in prices of non-food products (by 3.4%), rather than tariffs for services (by 0.7%) and food products (0.2%). In the annual breakdown (Jan-Dec 2016 to Jan-Dec 2015), deflation was also registered in the consumer market - 1.4% (against inflation of 3.7% a year ago), but in this case food and non-food products fell almost equally - by 3% and 2.5%, respectively, with a rise in price of services by 1.8%. In Jan-Sep 2017, deflation in 1.7% caused cheaper food products by 2.9% and non-food products by 0.8%, while tariffs for services decreased by 0.6%. In Jan-Sep 2017, in comparison with Jan-Sep 2016, 0.6% inflation was recorded in the consumer market due to a 3.8% rise in price of food products, with a 2.6% decrease in non-food prices and a 1.4% decrease in tariffs for services %. In September 2017, compared to September 2016, a similar pattern was observed: 1% inflation in the consumer market was triggered by food prices rising by 3%, with a decrease in non-food prices by 0.7% and a decrease in tariffs for services by 0.5%.

According to the Central Bank of Armenia, the inflow of transfers of individuals to Armenia declined by 6.1% per annum in Jan-Dec 2016 to $ 1.5 billion, with an outflow of 7.4% per annum to $ 817 million. As a result, net inflow of transfers of individuals dropped by 17.8% per annum. In the inflow and outflow of transfers of the dominant is Russia, at the end of 2016 - 58.5% and 40.8%, against 61.8% and 37.6% a year earlier. The inflow of transfers from Russia to Armenia decreased by 11.1% in 2016, with an outflow of 16.5%, which reduced the net inflow of transfers from Russia by 22%. In Jan-Jul 2017, the inflow of transfers of individuals to Armenia increased by 17.2% per annum - up to $ 899.9 million with an outflow of 24.2% - up to $ 527.5 million. As a result, the net inflow increased by 8.5% to $ 372.4 in the inflow, Russia's share was 58.1% (with an annual growth of 16.3%), and in the outflow - 39.4% (with an annual growth of 8.7%). As a result, the net inflow of transfers from Russia increased in Jan-Jul 2017 at 21.9% per annum.