Wednesday, October 7 2020 16:28
Karine Melikyan

According to WB new forecast for 2020, GDP decline in Armenia will be  6.3%

According to WB new forecast for 2020, GDP decline in Armenia will be  6.3%

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%).


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