Friday, December 7 2018 17:04

ArmInfo. The growth of the Armenian economy again accelerated after a pause in August-September 2018. The economic activity index returned to growth in October (by 3.0% y-o-y) after decreasing by 0.2% a month earlier. This is stated  in the November Macroeconomic Review of the Eurasian Development Bank  (EDB).

According to analysts of the Bank, due to strong growth in the first  half of January-October, the y-o-y growth of the economic activity  indicator remains at a fairly high level and amounts to 6.0%. The  indicator is in line with the EDB forecast, which implies real GDP  growth in 2018 at the level of 5.8%.  The main factor leading to the  growth in economic activity in October was the acceleration of  industrial production growth. At the same time, the recession  deepened in agriculture, which can be explained by unfavorable  weather conditions during the current year.

In October, the acceleration of growth in industry was ensured,  mainly due to an increase in electricity production, which grew to  20.6% y-o-y. Food production growth accelerated to 25.1% after rising  14.0% y- o-y in September. Recovery in output is also observed in  metallurgy, where growth in October was 3.0% y-o-y after a decline of  8.3% y-o-y a month earlier.

The composite leading indicator, calculated by the EEC, indicates a  slowdown in the growth of the Armenian economy in the short term.  Lower than in the first half of 2018, GDP growth can be observed due  to the relatively weak dynamics of domestic demand, which is  indicated by figures of retail sales and construction activity, as  well as due to the fact that growth in industry is concentrated in a  limited number of industries.

In October, consumer price growth in the country fell to 2.8% y -o-y  from 3.5% in September. The decline was due to a slowdown in food  inflation. Given the stability of the growth rates of prices for  non-food products and services, the Central Bank of Armenia expects  inflation below 4% of the target level for most of 2019-2021 with  inflation reaching the target level only at the end of the forecast  period. The CBA Governing Board left the refinancing rate at 6%  following the meeting held on November 13. Thus, the rate of the  Central Bank remains unchanged for 21 months in a row.

The foreign trade deficit in January-October 2018 amounted to $ 2.014  billion, an increase of 36% compared with January-October 2017. The  growth of the trade deficit in 2018 reflects, in particular, the  increase in the cost of energy imported by Armenia. In the conditions  of stopping the rise in oil prices in the fall of the current year,  the rise in the value of imports and, accordingly, the trade deficit  slowed down in September - October. In January - October 2018, the  state budget of the country was executed with a deficit of 34.8  billion drams. For comparison, the budget deficit in January -  October 2017 was 127 billion drams.  Improving the state of public  finances in 2018 was achieved due to both an increase in budget  revenues compared with last year and a reduction in budget  expenditures.