ArmInfo. According to the new forecast of the World Bank for 2020, the decline in Armenia's GDP will be 6.3%, against the previously expected 2.8% and actual 7.6% growth in 2019. In 2021, the WB expects Armenia's GDP to grow by 4.6%. This is noted in the WB report "Europe and Central Asia Economic Update" published on October 7, which indicates new expectations for a decline in GDP in the ECA region in 2020 by 4.4%, with growth in 2021 at 3.3 %.
Within the sectors Armenia's GDP is predicted by the World Bank for 2020: the agricultural sector will enter growth by 1.7% (from an actual 2.6% decline in 2019), while the industrial sector and the service sector will be in a 2.4% decline and 9.9%, respectively (against actual growth of 7.1% and 10.4% in 2019). For 2021, the World Bank predicts an acceleration in the growth of the agricultural sector to 2.5%, and the growth of the industrial sector and the service sector - by 4.6% and 5.1%, respectively.
The WB report notes that in 2020, private consumption in Armenia will decrease by the projected 9.1% (versus the actual growth by 10.3% in 2019), the decline in exports and imports will be 12.7% and 15.1%, respectively, and public debt will increase to 63.8% of GDP (from actual 53.5% of GDP in 2019). In 2021, according to the WB forecasts, these indicators will start to grow, except for the public debt, for which a slight decrease is expected. In particular, in 2021, private consumption will grow by 5.9%, exports - 5.3% and imports - 7.8%, and the national debt will decrease to 63.6% of GDP. The World Bank expects inflation in Armenia at 1.3% in 2020 (versus actually inflationary 1.4% in 2019), with an increase in 2021 to 2.9%. The current account deficit, according to the WB's expectations, will decrease from the actual 7.2% of GDP in 2019 to the projected 6.2% of GDP in 2020, with an increase in 2021 to 6.5% of GDP.
The budget deficit, according to the WB expectations, will jump from the actual 0.8% of GDP in 2019 to 5.4% of GDP in 2020, but in 2021 it will be followed by a decrease to 2.7% of GDP.
The ratio of net foreign direct investment to GDP, according to the WB forecasts, will decrease from the actual 2.9% in 2019 to 1% in 2020, but in 2021 some recovery will follow at the level of 2.3%.
In terms of poverty, the WB forecasts for Armenia are as follows: based on purchasing power parity (PPP) at a cost of $ 1.9 per day - an increase to 1.4% in 2020 (from 1.1% in 2019) and a decrease to 1.2% in 2021 ; based on PPP at a cost of $ 3.2 per day - an increase to 9.3% in 2020 (from 7.7% in 2019) and a decrease to 8% in 2021; based on PPP at a cost of $ 5.5 per day - an increase to 41.8% in 2020 (from 37% in 2019) and a decrease to 38.7% in 2021.
To note, according to the forecast of the Central Bank of the Republic of Armenia, updated in September, GDP is expected to decline by 6.2% in 2020 (against the previously forecast 4%). The Central Bank of Armenia also downgraded the forecast for exports and imports for 2020 to a uniformly significant decline of 29-32%, against the previously expected decline in imports by 15-17%, and exports by 12-15%, and their actual growth in 2019 by 9.1% and 10.3% respectively. In terms of the current account deficit to GDP ratio, the Central Bank improved its expectations for 2020 to a range of 5-6% (versus the previously expected 6-7%), and forecasts for the medium term did not change - in the range of 3-5%. The Central Bank slightly improved its forecast for 2020 on the decline in private transfers to 19-22% (from the previously expected 22-25%). The Central Bank of Armenia expects a higher budget deficit for 2020 - 5.7% of GDP (versus previously projected 5%), with an annual growth of 4.8 percentage points, and predicts that in 2020 the impact of fiscal policy on aggregate demand will be expanding (5.7%).