Wednesday, March 31 2021 19:39
Karine Melikyan

New forecast of the Central Bank of Armenia for 2021: GDP growth by  1.4%, export growth by 1-3%, import decline 2-4%, unemployment rate  18.6%

New forecast of the Central Bank of Armenia for 2021: GDP growth by  1.4%, export growth by 1-3%, import decline 2-4%, unemployment rate  18.6%

ArmInfo.Central Bank of Armenia downgraded Armenia's GDP growth forecast for 2021 to 1.4% from previous 2%. This is set out in the Central Bank's Monetary Policy  Program for the first quarter of 2021, published on March 31, where  expectations for economic growth in the medium term are estimated at  below 3.5%.

According to the Central Bank's forecast, in 2021, in parallel with  the reduction of uncertainty, private savings will slightly decrease,  but still exceed the level of 2019. As a result, private spending  will rise by 4.3% due to private consumption growth of 4.5% and gross  private fixed assets formation by 3%, which will serve as the main  driver of economic growth this year. The impact of government  spending on economic growth will mostly be negative.

In the breakdown by industry, the greatest growth is expected in the  construction sector and the main driving force will be construction  funded by public funds, while some recovery is seen in the  construction segment funded by organizations and the population.  Relatively high growth is also expected in the agricultural sector  due to the duration of the implementation of assistance programs. A  slow recovery is expected in the industrial and service sectors. In  particular, in the service sector, growth will be modest due to  expectations of a very slow recovery of tourism, and in the  industrial sector, a slow recovery will be due to a decrease in the  volume of extraction and processing of precious metals since the  beginning of 2021.

Over the medium term, economic activity will recover at a slower pace  than previously forecast, largely due to a slower recovery in  productivity and modest growth in private investment. Under these  conditions, GDP growth in the forecast horizon will remain at a low  level and at the end of the period will form close to the estimated  long-term level of 3.5%.

According to the forecasts of international experts, the prospects  for the recovery of world tourism are negative despite the  vaccination against coronavirus, for which there is still high  uncertainty in terms of the involvement of developing countries in  this process and their possibilities for purchasing vaccines. In  addition to these factors, the uncertainty in Armenia will also have  some negative impact on the tourism recovery process in the medium  term.

For the export of goods and services, forecasts for 2021 have been  revised by the Central Bank towards an increase of 1-3%, while for  imports a decline is expected in the range of 2-4%. The ratio of the  current account deficit to GDP in 2021, according to the Central  Bank's forecast, will be in the range of 2-4%, and in the medium  term, in parallel with the recovery of the global and domestic  economy, it will gradually approach and stabilize to the estimated  balanced level of 4-6%.

Regarding the state budget, the Central Bank predicts for 2021: the  tax / GDP ratio at 22.2%, which is 0.2 percentage points (pp) lower  than the 2020 level, and the expenditure / GDP ratio at 28.5%, which  is below the level of 2020 by 2.1 p.p. As a result, the ratio of the  state budget deficit to GDP in 2021 will be 5.3%, which is only 0.1  percentage points below the level of 2020. Moreover, the deficit of  the state budget will be financed from external sources and the  dominant share will be 378.6 billion drams already received from the  placement of Eurobonds. The impact of fiscal policy on gross demand  is assessed as weakly expanding (by 0.3 percentage points). This will  be driven by a neutral income signal and a weakly expanding spending  signal. For 2022, the impact of fiscal policy is assessed as somewhat  moderate, and in 2023 it will be neutral.  In the medium term, in  parallel with the economic recovery, from the point of view of  macroeconomic stability, it is important, according to the planned  scenario and in accordance with the tax and budget canons, to  gradually reduce the ratio of public debt to GDP (according to the  state budget for 2021, the ratio of government debt to GDP will be  above 60%) by increasing tax revenues and improving the structure of  expenses.

The unemployment rate, according to the forecast of the Central Bank  of Armenia, will amount to 18.6% in 2021, and in the medium term will  decrease to 18.3% due to the gradual neutralization of the impact  from the economic recession and the coronavirus pandemic.  To note,  according to the World Bank's forecast for 2021 updated in March this  year, Armenia's GDP is expected to grow by 3.4%, against the  previously expected 3.1% and an actual 7.6% decline in 2020. In  particular, according to the WB expectations, the growth of the  agricultural sector will be 1.3% in 2021 (against the actual 1.4%  growth in 2020), the industrial sector - 1.2% (against the actual  0.9% decline in 2020), the service sector - 5.1% (against the actual  14.7% decline in 2020). The WB also predicts an increase in exports  of goods and services from Armenia by 8.7% for 2021, and an increase  in imports by 8.3%, against the actual decline in exports by 3.9% and  imports by 17.7% in 2020. The WB forecasts current account deficit in  Armenia at 4.8% of GDP in 2021 (against the estimated 4.2% in 2020).  On the state debt of Armenia, the World Bank predicts growth to 70.8%  of GDP in 2021 (from actual 67.3% in 2020). The ratio of the state  budget deficit to GDP, according to the WB forecast, will be 5.3% in  2021 (against the actual 5.1% in 2020). WB forecasts assume that in  2021 48% of the population (versus 51% in 2020), due to loss of  income, will remain below the poverty line, taking into account the  PPP-based poverty level at a cost of $ 5.5 per day.

POST A COMMENT
Input digits     


News
Termination of service of MIR cards. IDBankTermination of service of MIR cards. IDBank
Mobile trade regulations to be in effect throughout Armenia Mobile trade regulations to be in effect throughout Armenia 
Official cites financial reasons for suspension of Fly Arna airline  operation Official cites financial reasons for suspension of Fly Arna airline  operation 
Subsidiary of Public TV of Armenia to have right to nationwide  broadcasting  Subsidiary of Public TV of Armenia to have right to nationwide  broadcasting  
About 700 Armenian heavy cargo trucks waiting to pass through Upper  LarsAbout 700 Armenian heavy cargo trucks waiting to pass through Upper  Lars
Armenian Economy Ministry, several U.S. government departments form  specific action program Armenian Economy Ministry, several U.S. government departments form  specific action program 
Public TV`s First News Channel to be broadcasted not only in Yerevan,  but also throughout countryPublic TV`s First News Channel to be broadcasted not only in Yerevan,  but also throughout country
Ardshinbank cardholders can now enjoy a 10% cashback!Ardshinbank cardholders can now enjoy a 10% cashback!
“G20/OECD Principles of Corporate Governance” workshop“G20/OECD Principles of Corporate Governance” workshop
ECC, EDB to coordinate funding of joint projects ECC, EDB to coordinate funding of joint projects 
Broadcasting of Russian TV channels to be discussed in Moscow soon Broadcasting of Russian TV channels to be discussed in Moscow soon 
Armenia to host World Wine Tourism Conference,Armenia to host World Wine Tourism Conference,
CBA forecasts 5.5% or 6.4% GDP growth for 2024 depending on inflation  rate  CBA forecasts 5.5% or 6.4% GDP growth for 2024 depending on inflation  rate  
Three Sad Stories about FraudstersThree Sad Stories about Fraudsters
Rafayel Gevorgyan: Armenia`s economic growth potential is 6%Rafayel Gevorgyan: Armenia`s economic growth potential is 6%
TEAM already has over 1 million mobile subscribersTEAM already has over 1 million mobile subscribers
Armenia`s ministry of economy proposes new SAFE format Armenia`s ministry of economy proposes new SAFE format 
CBA Governor: Over 11 thousand Artsakh refugees employed in ArmeniaCBA Governor: Over 11 thousand Artsakh refugees employed in Armenia
Armenian economy is approaching neutral interest rate level- Martin  GalstyanArmenian economy is approaching neutral interest rate level- Martin  Galstyan
CBA: external inflationary impact on Armenian economy continues to  weaken significantlyCBA: external inflationary impact on Armenian economy continues to  weaken significantly
Martin Galstyan: It`s too early to talk about threat of overheating  in consumer lending marketMartin Galstyan: It`s too early to talk about threat of overheating  in consumer lending market
Non-cash transactions surpass cash ones in Armenian plastic card  marketNon-cash transactions surpass cash ones in Armenian plastic card  market
CBA reduces refinancing rate by 0.25 pp. setting it at 8.5%CBA reduces refinancing rate by 0.25 pp. setting it at 8.5%
After construction of alternative route, Lars to become passable all  year round - Deputy MinisterAfter construction of alternative route, Lars to become passable all  year round - Deputy Minister
3,780,052 Drams to the City of Smile Fund: The Power of One Dram Will Go to My forest Armenia in March3,780,052 Drams to the City of Smile Fund: The Power of One Dram Will Go to My forest Armenia in March
Global Finance Recognizes Ameriabank`s Leadership in Sustainable Finance in ArmeniaGlobal Finance Recognizes Ameriabank`s Leadership in Sustainable Finance in Armenia
Project to create unified gas market in EAEU postponed until 2027Project to create unified gas market in EAEU postponed until 2027
Amounts exceeding maximum social payments from several sources to be  returned to individualsAmounts exceeding maximum social payments from several sources to be  returned to individuals
Finance Minister considers leaving EAEU riskyFinance Minister considers leaving EAEU risky
Gevorg Papoyan: There cannot be systemic corruption in Ministry of  EconomyGevorg Papoyan: There cannot be systemic corruption in Ministry of  Economy
Minister of Economy: I see no objective reasons for closure of Upper  Lars to Armenian goodsMinister of Economy: I see no objective reasons for closure of Upper  Lars to Armenian goods
Araratbank plans to implement ESG risk management strategy with  environmental, social and corporate management Araratbank plans to implement ESG risk management strategy with  environmental, social and corporate management 
Well-being and future are impossible without compliance with ESG -  Araratbank rep Well-being and future are impossible without compliance with ESG -  Araratbank rep 
Armenia should completely switch to renewable energy - Jon Dee Armenia should completely switch to renewable energy - Jon Dee 
Connection with Europe via Georgia Armenia`s energy priority -  officialConnection with Europe via Georgia Armenia`s energy priority -  official
Half Price for Everyone and up to AMD 15.000 Welcome Bonus for New Customers. IDBankHalf Price for Everyone and up to AMD 15.000 Welcome Bonus for New Customers. IDBank
Armenia`s economic activity increased by 10.7% per annum in Jan 2024Armenia`s economic activity increased by 10.7% per annum in Jan 2024
Deputy PM: there is need to review current water resources management  policyDeputy PM: there is need to review current water resources management  policy
Armenia`s premier meets with Egyptian businessmen Armenia`s premier meets with Egyptian businessmen 
Hovak Hovakimyan: We should not limit ourselves to domestic market in  development of Armenia`s capital marketHovak Hovakimyan: We should not limit ourselves to domestic market in  development of Armenia`s capital market
Garegin Gevorgyan: Armenia can become trading hub for foreign  securitiesGaregin Gevorgyan: Armenia can become trading hub for foreign  securities
Doing Digital Forum Returns Featuring Brett King as Keynote SpeakerDoing Digital Forum Returns Featuring Brett King as Keynote Speaker
Decline in Armenia`s consumer prices was caused by food products;  while prices for services and gasoline were on riseDecline in Armenia`s consumer prices was caused by food products;  while prices for services and gasoline were on rise
FLYONE ARMENIA offers number of new destinations this summerFLYONE ARMENIA offers number of new destinations this summer
Gevorg Papoyan appointed Armenia`s minister of economyGevorg Papoyan appointed Armenia`s minister of economy
Samvel Khanvelyan: Armenia`s domestic debt market is Samvel Khanvelyan: Armenia`s domestic debt market is "limping" in  terms of investment base and structure 
Armenian capital market is at its initial stage of development -  Deputy MinisterArmenian capital market is at its initial stage of development -  Deputy Minister
Armenia should be among world leaders in a number of technological  areas - expertArmenia should be among world leaders in a number of technological  areas - expert
Google Pay is now accessible for Armswissbank Mastercard cardholdersGoogle Pay is now accessible for Armswissbank Mastercard cardholders
Number of vPOSs in Armenia already exceeds 4.5 thousandNumber of vPOSs in Armenia already exceeds 4.5 thousand
2-3 nuclear power units with capacity of 200 MW each would make it  possible to more effectively manage country`s energy system - PSRC  Chair2-3 nuclear power units with capacity of 200 MW each would make it  possible to more effectively manage country`s energy system - PSRC  Chair
ADB to provide  $3 million grant to Armenia to increase agricultural  flexibility and improve food security in rural areasADB to provide  $3 million grant to Armenia to increase agricultural  flexibility and improve food security in rural areas
By accepting 20% stake in MTS Armenia as gift, government sends  message to other companies:  PashinyanBy accepting 20% stake in MTS Armenia as gift, government sends  message to other companies:  Pashinyan
Micro-processing cards with NFC chip account for almost 70% of total  number of cards in Armenia, already reaching 2.6 millionMicro-processing cards with NFC chip account for almost 70% of total  number of cards in Armenia, already reaching 2.6 million
A Millionaire Wanted: New Draw from IdramA Millionaire Wanted: New Draw from Idram
PSRC: construction of Mets Masrik  industrial-scale solar power plant  in Armenia is nearing completionPSRC: construction of Mets Masrik  industrial-scale solar power plant  in Armenia is nearing completion
Wizz Air launches Budapest-Yerevan-Budapest direct flights Wizz Air launches Budapest-Yerevan-Budapest direct flights 
Temporary ban on gasoline exports from Russia will not affect ArmeniaTemporary ban on gasoline exports from Russia will not affect Armenia
14 Armenian tech companies participate in Mobile World Congress in  Barcelona14 Armenian tech companies participate in Mobile World Congress in Barcelona
Tax authorities propose not to tax labor migrants with annual income  of up to AMD 12 million Tax authorities propose not to tax labor migrants with annual income  of up to AMD 12 million 
Read more


Exchange rates
18.03.2024
RUB4.37-0.01
USD401.96-0.67
EUR438.10-0.36
GBP511.98-1.33
CAD296.82-0.70
JPY26.96-0.10
CNY55.84-0.11
CHF455.17-0.60