EBRD  delivers better forecast for economic growth in Armenia for 2017-2018

ArmInfo. The European Bank for Reconstruction and Development (EBRD) improved the forecast for GDP growth in Armenia for 2017 from the previous 2.5% to 3.5%, expecting similar growth in 2018 (against the previous 3%). This is stated in the November review "Regional Economic Prospects in the countries of EBRD presence" (Regional Economic Prospects in EBRD Countries of Operations).

"Armenia's economic growth in the first half of 2017 turnover, after almost stagnating in 2016. GDP of the country in the first quarter of 2017 grew by 6.5% per annum, in the second - by 5.5% per annum. The growth of the economy was provided by strong export indicators, and as well as the restoration of the growth of remittances to Armenia after their three-year reduction. On the other hand, in the first 9 months of 2017, the volume of construction and gross agricultural production continued to decline. Inflation in the consumer market has slowly increased, reaching 0.6% in January-September 2017 at an annual rate of 0.6%, which was accompanied by a softening of monetary conditions and the restoration of household consumption, "the survey said.

The review also notes that in Armenia the current fiscal consolidation is aimed at gradual reduction of the national debt. The ratio of the state budget deficit to GDP according to the plan for 2017 will decrease to 3% from 5.6% in 2016, due to less volume than a year earlier of state investments. The banking sector after successful recapitalization, according to the EBRD forecast, is well placed to increase lending to the economy.

Analysts of EBRD expect that the economic growth in Armenia will be boosted by the restoration of the economies of the main trading partners, but the Armenian economy remains vulnerable to several risks, including. volatility in commodity markets. At the same time, the unresolved Nagorno-Karabakh conflict may pose a risk to the growth of the Armenian economy.

It should be noted that the state budget of Armenia for 2017 laid the GDP growth by 3.2%, against the 2.26% pledged for 2016. The government of the country at the meeting in late September approved the draft state budget of the republic for 2018 with GDP growth of 4.5%. According to the National Statistical Service of Armenia, economic activity in Armenia in January-September 2017 increased by 5.1% per annum (against 1.6% in the same period in 2016). In 2016, GDP growth slowed to 0.2% from 3.2% in 2015.

It should be recalled that according to the October updated forecast of the IMF, the GDP growth of Armenia for 2017 has been improved from the previous 2.9% to the current 3.5%, with a slowdown in 2018 to 2.9%. According to the World Bank forecast, the GDP growth in Armenia is expected to be 2.7% in 2017, with an acceleration of the rate in 2018 to 3.1%, in 2019 - up to 3.4%. According to the forecast of the EDB in 2017, the GDP of Armenia is expected to grow by 2.9%, the 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. According to the updated forecast of the Central Bank of Armenia, the GDP growth of Armenia in 2017 will be 3.9-4.8%, and in 2018 the Central Bank forecasts real GDP growth of 5.5%, referring to the main drivers of services and the industrial sector. According to the forecast of the Central Bank of Armenia for 2017, the ratio of state debt to GDP will be 55%. According to the state budget deficit in GDP, the Central Bank predicts 2.7% for 2018, against the expected 3.6% in 2017. With regard to money transfers of individuals, the Central Bank revised the forecast for growth for 2017 in the direction of a slowdown from the previous 14-16% to the current 12-14%, which was caused by the slow recovery of the Russian economy.