Thursday, April 25 2019 13:02

ArmInfo. According to Eurasian Development Bank (EDB) forecasts, GDP growth in Armenia in 2019 will accelerate to 5.3% from actual 5.2% in 2018. This is noted in the  macroeconomic review of Armenia prepared by the Directorate for  Analytical Work of the EDB. For 2020, the EDB predicts a slowdown in  GDP growth to 4.6% with a subsequent acceleration in 2021 to 5.1%.

The acceleration of GDP growth in 2019 will be mainly due to the  recovery of private consumption against the background of active  growth of loans to households. Additional support for economic growth  will be provided by the restoration of investment activity with the  gradual adaptation of the mining industry to new environmental  requirements from the state, and the implementation of state  initiatives to improve the investment climate.

The factor that can limit economic growth in 2019 is the uncertainty  associated with the further operation of the Amulsar mine and the  Alaverdi copper smelter.

Monetary conditions

The EDB forecasts in Armenia the start of the rate increase cycle in  2019 with a subsequent continuation against the background of a  gradual acceleration of inflation from 2.1% in 2018 to the expected  2.8% in 2019 with a subsequent increase to 3.4-3.9% in 2020- 2021,  which in turn will be neutral in terms of its impact on economic  growth and inflation.

AMD exchange rate stability 

The dram rate to the US dollar in the forecasted period will remain  quite stable: the nominal rate of the dram to the US dollar (average  for the year) is expected in 2019 at the level of 486 AMD / $ 1 with  this level remaining in 2020. The stability of the Armenian dram will  be promoted by the relative balance of foreign economic operations  due to the growth in the inflow of foreign investments.

The nominal one-day rate of interbank credits in national currency,  according to the EDB forecast, will increase in 2019 to 6.4% of the  average annual from actual 6.1% in 2018, with continued growth in  2020 to 7.3% and in 2021 to 7.7%.

GDP growth will accelerate in Russia and the Eurozone

According to the EDB forecast, Russia's GDP growth in 2019 will be  1.5%  accelerating in 2020 to 2% and in 2021 to 2.2%. According to  the EDB forecast,GDP in the Eurozone is expected to grow by 1.3% in  2019 accelerating in 2020 to 1.7% and maintaining this level in 2021.  The average annual copper price is projected by the EDB at $ 6,441  per ton in 2019, with an increase in 2020 and 2021 to $ 6,489 per ton  and $ 6,561 per ton, respectively. According to the EDB, the average  annual price of Urals oil will fall from $ 65 per barrel in 2019 to $  64.7- $ 63.4 per barrel in 2020-2021.

To note, according to the updated World Bank forecast, GDP growth in  Armenia in 2019 is expected to be at the level of 4.3% with  acceleration in 2020 to 4.6%. As regards Armenia's foreign trade, the  World Bank predicts for 2019 export growth to 8.8% and import growth  to slow down to 12.2%, against export growth of 7.8% and import by  21.1% in fact recorded in 2018. For 2020, the World Bank forecasts  export growth by 9.4%, and imports - by 11.4%. According to the IMF  forecast updated in April 2019, the GDP growth in Armenia in 2019  will be 4.6% with a slowdown in 2020 to 4.5%. According to the new  IMF forecast, in 2019 inflation in Armenia will make 2.1%, and in  2020- 3%. According to the forecast of the Central Bank of Armenia,  GDP growth for 2019 is expected to be in the range of 4.6-6.1%, which  is mainly caused by an increase in private consumption by 5.1% and  private investment by 0.3%. In the medium term, the main factor in  GDP growth, according to CBA forecasts, will be the expansion of  production capacity, the sequence of structural reforms implemented  by the government and the potential for expected economic growth in  the partner countries of Armenia. For imports, the Central Bank  predicts an increase of 2-4% for 2019, and 4-6% for exports. In the  state budget of the Republic of Armenia for 2019, GDP growth of 4.9%  is laid.