Tuesday, November 27 2018 21:08

ArmInfo. The Central Bank of Armenia has adjusted the range of the forecast for GDP growth for 2018 from the previous 5.6-6.9% to the current 4.6-5.1%. The Central  Bank also revised down the expected growth threshold in the medium  term: for 2019 - 4.4-5.5% and for 2020 - 3.9-5.4% (versus previously  predicted 4.6-6.4% and 4 , 1-6.2%, respectively).

This is set out in the Central Bank's monetary policy program (GST) for the fourth  quarter of 2018, published on November 27.  The decrease in the range  of the forecast for 2018 by the Central Bank causes a slowdown in the  third quarter of the growth of economic activity from the high rates  observed in the first half of the year. But so far, the growth of  private sector expenditures remains at a high level due to the  unprecedented increase in reserves of funds in circulation. Economic  growth forecasted for 2018 by the Central Bank is mainly due to fixed  investment activity, growth in economy crediting, increase in the  number of tourists visiting Armenia.  The impact of private sector  spending on economic growth will be stimulating by 10.6 percentage  points (pp), while government spending and exports will have a  downward effect - by 2.8 pp and 2.9 pp, respectively.

Predicted for the medium term, the economic growth of the Central  Bank, mainly due to the development of basic segments of the economy,  investment activity and the progress of reforms. In particular, we  are talking about increasing production capacity, carrying out  structural reforms by the Government, and the potential for expected  economic growth in the partner countries of Armenia.

The forecast for the growth of exports in 2018 of the Central Bank  and this time revised to a slowdown to 3-5% (against the previously  expected 8-10%), due to the influence of problems persisting in the  mining industry. But on import, on the contrary, the forecast of  growth by the Central Bank has been adjusted in the direction of  acceleration to 9-11% (against the previously expected 6-8%).

The forecast for the growth of remittances for 2018 is again revised  downwards from the previous 5-7% to the current 1-3%. This Central  Bank causes lower than expected growth in remittances in the third  quarter, due to new rounds of devaluation of the ruble and the  likelihood of this trend in the fourth quarter.  Based on the above,  the Central Bank also revised its forecast for the current account  deficit / GDP ratio for 2018, expecting a slight increase - to 5-7%  (versus previously forecast 4-5%), with stabilization in the medium  term nearby 3% in the case of rapid export growth.

It should be noted that according to the World Bank's forecast for  2018 updated in October 2018, Armenia's GDP growth will be 5.3%, with  a slowdown to 4.3% in 2019 with a subsequent acceleration to 4.6% in  2020. In the state budget of the Republic of Armenia for 2018, GDP  growth is 4.5%, and in the state budget for 2019, GDP growth is 4.9%.  According to the updated IMF forecast, GDP growth in Armenia in 2018  will be 6%, with a slowdown in 2019 to 4.8%.

According to the RA Statistics Committee, Armenia's GDP grew by 7.5%  in 2017 to 5.580 trillion drams ($ 11.6 billion). A year earlier, in  2016, GDP growth slowed to 0.2% from 3.2% in 2015. The GDP deflator  index in 2017 was 102.2%, against 100.5% in 2016. Economic growth in  2017 was supported by the services sector - by 14.4% per annum, trade  - by 14% and the industrial sector - by 12.6%, against growth by  7.1%, 0.1% and 6.7% respectively a year earlier . A relatively modest  growth was also provided by the energy complex and the construction  sector - 6.1% and 2.2%, which a year earlier recorded a decline -  6.2% and 10.8%. Against this background, the agricultural sector,  lingering in a recession, only slowed down to 3% from 5.2% in 2016.  Armenia's foreign trade turnover in 2017 increased by 26.9%, in  particular, exports - by 25.2% and imports - by 27.8%. A year  earlier, in 2016, foreign trade turnover increased by 7.4% due to the  growth of exports by 20% and imports by 1.6%.

According to statistics, economic activity in January-October 2018  increased by 6% per annum against the background of growth in foreign  trade turnover by 20.7%, in particular, exports - by 11.7% and  imports - by 25.8%. The main growth driver was the service sector -  18.5%, and to a lesser extent, the trade sector - 9.6%, the  construction sector - 6.5%, industry - 4.5% and the energy complex -  1.8%, against which the agricultural sector lingered in a recession -  8.9%. A year earlier, in January-October 2017, the growth of economic  activity was 7% per annum and the drivers were services, trade,  industrial sector and energy complex - 13.9%, 12.8%, 12.4% and 5.4%  respectively, and growth a 22.4% foreign trade turnover was triggered  by a 19.4% rise in exports and 24% in imports.