ArmInfo. The Eurasian Development Bank expects a gradual recovery in the economies of the member countries of the bank. This forecast was made in the EDB's information and analytical review for July 2020.
In most countries of the region, according to the results of the second quarter of this year, a decline in GDP was recorded. The largest drop was noted in Kyrgyzstan and Russia (by 10.9 and 8.5% y / y). To mitigate the negative economic and social consequences of the COVID-19 pandemic, EDB member states are actively applying fiscal and monetary support measures. In the second quarter of 2020, the deficit of the state budgets of the countries of the region expanded noticeably. State support is focused on the most affected sectors of the economy and households and includes financial assistance to businesses, providing access to concessional lending, reducing the administrative and regulatory burden, tax breaks, and income support. Monetary regulators continued to ease monetary policy in July to facilitate the recovery in economic activity. In the section devoted to Armenia, EDB analysts note that the Ministry of Economy of the republic recorded a decrease in the physical volume of exports of certain types of agricultural products compared to 2019.According to information, supplies of vegetables and fruits outside the country in the first half of the year fell by 15% y / y due to less favorable weather conditions than in 2019.
Taking into account that the agro-industrial complex has a significant share in the structure of Armenia's GDP (18.5% in 2019, according to the EDB), the export dynamics noted by the authorities may indicate the risk that the agricultural sector will make a negative contribution to the country's economic growth by the results of 2020 in addition to the negative impact of the coronavirus pandemic.
Nevertheless, the depth of the recession in the Armenian economy in June 2020 decreased. The economic activity indicator declined by 7.5% YoY (minus 12.8% YoY in May 2020). Its fall in January-June 2020 amounted to 4.7% y / y. With the weakening of sanitary restrictions at home and abroad, recovery in output was observed in all major sectors. Industrial production decreased in June 2020 by 2.4% y / y (an increase in ore extraction by 18.2% y / y and metal output by 44.8% y / y almost balanced the decline in other industries), construction volume - by 23.3% YoY, wholesale and retail trade turnover - by 12.4% YoY. A month earlier, these indicators declined by 3.9% y / y, 27.0% y / y and 18.4% y / y, respectively. Bank analysts expect that the slowdown in the spread of coronavirus will create conditions for a gradual normalization of the country's economy, although at the end of the year its GDP will still decrease compared to 2019. The deficit of the current account of the balance of payments of the country's economy in Q1 2020 decreased to USD 0.197 billion (8.9% of GDP) from USD 0.228 billion (7.5% of GDP) in the same period of 2019. the balance is explained by a decrease in the foreign trade deficit from USD 0.320 to USD 0.284 million amid falling imports (one of the reasons was the cheaper energy carriers) and the stability of export earnings (an increase in supplies in real terms due to a significant increase in production in metallurgy and ore mining balanced the decline in world prices for metals).
Meanwhile, capital inflows into the country have increased, as evidenced by the growth of the financial account deficit from $ 0.212 to $ 0.234 billion. Under these conditions, the Central Bank's reserve assets amounted to USD 2.6 billion (4.2 months of imports of goods and services) in the first quarter of 2020 (USD 2.2 billion or 3.9 months of imports a year earlier). The external stability of the Armenian economy at the end of the first quarter of 2020 was in a better state than a year earlier, the EDB analysts note.
(https://eabr.org/upload/iblock/658/informatsionno_analiticheskiy-obzor.pdf)
