ArmInfo. Central Bank of Armenia revised the forecast for 2020 on foreign trade towards a larger decline, expecting an equably significant decline in volumes of export and import by 29-32%. This is stated in the monetary policy program of the Central Bank for Q3 of 2020 published on September 30, in which the forecast for a decline in GDP in 2020 was worsened to 6.2% from the previously forecasted 4%.
This is due to the delay in the recovery of the global and domestic economy, i.e. very weak-than-expected signs of growth, a suspension of tourist traffic due to restrictive measures against the backdrop of the coronavirus pandemic, and an increase in additional costs when opening international routes.
In terms of the current account deficit to GDP ratio, the Central Bank has improved its forecast for 2020 to a range of 5-6%.
Central Bank forecasts for the medium term foreshadow that a weaker than expected recovery of the global and domestic economy will affect the growth rate of foreign trade, i.e. the upward trend in exports and imports will be slower than previous expectations. In the mid-term, according to the new forecast of the Central Bank of Armenia, the current account deficit / GDP ratio will approach the balanced level in the range of 3-5%. To recall, in the previous (June) forecast, the CBA for 2020 expected a more moderate decline in both imports by 15-17% (against the actual growth in 2019 by 9.1%), and in exports - by 12-15% (against actual growth in 2019 by 10.3%). In these conditions, the Central Bank of Armenia expected that the ratio of the current account deficit to GDP would be placed in the range of 6-7% in 2020, and in the medium term - a gradual approach to the balanced level in the range of 3-5%.
Note that, according to the RA Statistical Committee, Armenia's foreign trade turnover in January-August 2020 decreased by 10.2% per annum - to $ 4.4 billion, in particular, the volume of exports dropped by 6% - to $ 1.6 billion, while imports fell by 12.4% - to $ 2.8 billion. In August 2020, compared to August 2019, a 4% decrease in foreign trade turnover was provoked by an almost equal decline in exports and imports - by 3.8% and 4.1%, respectively. This situation was recorded with a decline in economic activity in January- August 2020 by 6.4% per annum, and in August 2020 to August 2019, the decline in this indicator turned out to be more - 9.8%. A year earlier, during the same periods, the dynamics of foreign trade was upward, and the growth of exports significantly prevailed over the growth of imports, and this was observed against the background of an increase in economic activity both in January-August and in August - by 7% and 7.6% y-o-y.