Wednesday, July 1 2020 11:57
Karine Melikyan

Unemployment rate will be 20.4% in 2020 according to updated forecast  of the Central Bank of Armenia

Unemployment rate will be 20.4% in 2020 according to updated forecast  of the Central Bank of Armenia

ArmInfo. According to the updated  forecast of the Central Bank of Armenia, the unemployment rate in  2020 will be 20.4%, after which, with a slow economic recovery, this  indicator will annually decrease by 0.3-0.5 percentage points in the  medium term to 19.6% (against the previously expected 17.3% after a  y-o-y decline of 0.8-1.2 percentage points). This forecast is given  in the Central Bank's Monetary Policy Program for the Q2, 2020, which  noted a deterioration in the forecast for GDP for 2020 expecting a 4%  decline (against the previously expected stagnation growth of 0, 7%).

The Central Bank has revised its forecast for unemployment, given the  expected economic downturn in the current development of the  coronavirus pandemic, as a result of which business hours will be  reduced by business entities. At the same time, the influence of  these factors on unemployment is extremely uncertain, since the  spread of coronavirus can lead to a reduction in the supply of labor.  An incomplete estimate of the unemployment rate in the second quarter  of 2020 is the result of not counting in the calculations of many  workers who were left without work during the pandemic. The Central  Bank also predicts that in enterprises, along with a slowdown in  productivity growth rates, nominal labor costs will accelerate.

Regarding nominal wages in the private sector, the Central Bank  predicts a slight slowdown in growth to 6.8% in 2020, stipulating its  expectations both by raising minimum wages and by changing the  structure of average wages, since workers in the most vulnerable  sectors on the list of temporarily prohibited economic activities  because of coronavirus, are mainly people with a lower than average  payment. Even in the April statistical data, which recorded an  increase in the average wage by 9.8%, there was an explanation about  the absence in the calculations of temporarily idle workers due to a  pandemic, if taken into account, there would be a slowdown in the  growth of average wages. Given this factor, the Central Bank  estimates that wage growth in the private sector slowed in April to  6.3%, instead of the published 12.8%. And already in the medium term,  the growth rate of nominal wages in the private sector will  correspond to projected economic development and inflationary  expectations. In particular, for 2021, the Central Bank expects  nominal wages in the private sector to grow by 6.4% with  stabilization at the end of the forecast period at about 7.1%.

According to the RA Statistical Committee, in 2019, the average  annual unemployment rate in Armenia was 18.9%, compared to 20.5% in  2018 and 20.8% in 2017. It is noteworthy that the actual unemployment  rate recorded in 2019 completely coincided with the indicator  predicted by the Central Bank. The full coincidence of the Central  Bank forecasts with the actual unemployment rate was also recorded at  the end of 2018, and in 2017 the figure obtained was only 0.1  percentage points below expectations of the Central Bank. It is  appropriate to note that since 2019, the unemployment rate has been  calculated according to the new method, excluding those employed in  the household, in accordance with which the indicators have also been  recounted in comparable dynamics. In this regard, the Central Bank in  2019 in its forecasts began to indicate the level of unemployment  already in the calculation according to the new methodology.

According to statistical data, as of January 1, 2020, according to  the new methodology, the number of employed people in Armenia reached  946.8 thousand people (with a y-o-y growth of 4.3%) or 46.8% of the  economically active population (against 45.2% in 2018). And there  were 220.5 thousand unemployed on this date, with a y-o-y decline of  5.8%. 


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