Friday, December 14 2018 19:41

ArmInfo.According to IMF expectations, GDP growth in Armenia in 2018 will be lower than the forecasted 6%. Yulia Ustyugova, Permanent Representative of the IMF  in Armenia, expressed this opinion in an interview with ArmInfo  correspondent, noting that if the forecast had been made today, the  International Monetary Fund would certainly have indicated a lower  threshold for GDP growth in Armenia.

She explained such change in expectations by external volatility.  "I'll name a number of external factors that lead to such a forecast.  First of all, I'll note the slowdown in global growth of the world  economy in 2018, it became less high and less balanced, that is, the  growth slackened. For some countries, the IMF revised its forecasts  downward. Among them, China and the European Union, which are one of  Armenia's main trade partners. Of course, I'll also mention Russia,  on which the economy growth forecast, although not revised downward,  remains at a rather low level. Based on abovementioned, the export  demand declined, which is reflected in Armenia's figures indicating a  steady slowdown in export growth during the current year. In  addition, growth in remittances slowed down in 2018. When growth in  economies of trading partners slows down, it becomes more difficult  for Armenia's economy to grow faster, since the support that was  provided from the outside is already declining. And the result is the  following - the current account deficit deepens, " Ustyugova  explained.

On ArmInfo's question what are the expectations against such a  background in 2019, she replied: "The IMF's forecast for GDP growth  for Armenia is still 4.8% for 2019. Whether this forecast will change  or not depends on the economic program the new government of Armenia  will present in the coming year, and how it will be implemented in  the first half of the year. The forecast, if revised, will proceed  from the development of this situation, and taking into account the  overall global changes.'' During the conversation, Ustyugova  mentioned the most serious external threats to Armenia: "Trade wars  continue and their scope will increase. There is an external  tightening of financial conditions - an increase in interest rates,  which has already led to capital outflow from some developing  countries. The dollar is strengthening against other currencies and  Armenia, as you know, is sensitive to changes in the exchange rate  due to the high level of dollarization of the state debt and the  banking sector. Sanctions against Iran also play a negative role.  It's very difficult to forecast anything in such conditions. "

To the question of whether Armenia has strengths, she replied: "Of  course, there are. Among such strong points are a fairly adequate  level of foreign exchange reserves at the moment; a strong monetary  policy; a strong banking sector; fiscal institutions are  strengthened. In general, strong and competent macroeconomic  stability will soften the blow of external negative shocks on the  Armenian economy. "

To recall, according to the IMF's October forecast, GDP growth in  Armenia is expected to reach 6% in 2018, with a slowdown in 2019 to  4.8%. According to the IMF forecast, the deficit of the current  account to GDP will be 3.8% in 2018, while this threshold will remain  in 2019. In Russia, the IMF predicts GDP growth in 2018 by 1.7%, with  growth accelerating in 2019 to 1.8%, and the current account surplus  of the Russian Federation to GDP will be 6.2% in 2018 with a decrease  in 2019 to 5.2%.  To note, the Central Bank of Armenia corrected the  range of GDP growth for 2018 in the updated forecast in November from  the previous 5.6-6.9% to the current 4.6-5.1%. The Central Bank also  revised the expected growth limit in the medium term towards  slowdown: 4.4-5.5% for 2019 and 3.9-5.4% for 2020 (versus previously  forecasted 4.6-6.4% and 4 , 1-6.2%, respectively). The forecast for  export growth in 2018 by the Central Bank revised to a slowdown to  3-5% (against the previously expected 8-10%), while for imports, on  the contrary, the growth forecast was adjusted to accelerate to 9-11%  (against the previously expected 6-8 %). The forecast for the growth  of remittances for 2018 of the Central Bank is again revised  downwards from the previous 5-7% to the current 1-3%. Based on this,  the Central Bank revised its forecast for the current account deficit  / GDP ratio for 2018, expecting a slight increase - up to 5-7%  (versus previously forecasted 4-5%), with stabilization in the medium  term of about 3% in the case of rapid export growth.

The state budget of Armenia for 2018 sets GDP growth at 4.5%, and in  the state budget for 2019 - 4.9%.

According to the RA Statistical Committee the economic activity  increased by 6% in January-October 2018 versus the same period of  2017 (against 7% a year earlier). Foreign trade turnover slowed down  the y-o-y growth from 22.4% to 20.7%, in particular, the rise in  exports slowed down from 19.4% to 11.7%, while imports, on the  contrary, accelerated from 24% to 25.8%.

According to the Central Bank, in January-September 2018, to the same  period of 2017, the growth in private transfers grew sharply from  16.4% to 3.6%, reaching $ 1.279 billion, which was accompanied by a  similar trend in the rise of inflows from Russia from 16.5% last year   to the current 3.4%, amounting to $ 769.8 million. Against this  background, in January-September 2018, the y-o-y growth of outflow of  transfers from individuals accelerated from last year's 18.9% to the  current 23.5%, following the acceleration of the ascent of  remittances from Armenia to Russia - from 10.3% to 22.5%.