Friday, August 26 2022 22:33
Alina Hovhannisyan

EDB: Armenia`s economy growth in 2022 will be quite high and will  exceed expectations

EDB: Armenia`s economy growth in 2022 will be quite high and will  exceed expectations

ArmInfo.Given the upward pace recorded in the first half of the year, Armenia's GDP growth in 2022 will be quite high and will exceed expectations. Alexey  Kuznetsov, Head of Economic Analysis at the Eurasian Development Bank  (EDB), stated during a round table discussion of the Analytical  Center for Strategic Research and Initiatives.

He added that the EDB forecasts that the economic growth rates in  Armenia will continue in 2023-2024, expecting an average y-o-y GDP  growth of 4%.

Speaking about the results of the first half of the year, Kuznetsov  explained that such success was achieved primarily due to a  significant increase in consumer demand in the country. <For example,  the service sector showed growth of almost 20%, trade turnover grew  by almost 10%. These two sectors provide about 80% of the growth that  we are seeing>, he said.

At the same time, he indicated that consumer support was facilitated  by a multiple increase in the number of tourists to Armenia, in  particular, by a 4-fold increase in y-o-y terms. Moreover, 40% of  tourists were from the Russian Federation, with a 2.5-fold y-o-y  growth.

Another factor of support, he called a sharp increase in remittances  from individuals. "For two months in a row we have seen a record  inflow of transfers from the Russian Federation - in May the volume  exceeded $266 million, and in June $462 million was already  recorded," the expert said. In addition, according to Kuznetsov, the  economic growth in Armenia was supported by the manufacturing  industry, the construction sector, etc.

In his opinion, support for consumer demand will continue in H2 2022,  continuing to contribute to the growth of the economy as a whole.

It should be noted that according to the preliminary data of the RA  Statistical Committee, economic activity in Armenia in January-July  2022 increased by 13.1% per annum. In July 2022, compared to the same  month in 2021, the growth in economic activity amounted to 19.4%.

In the first half of the year, 653,058 people arrived in Armenia from  abroad, with an increase of 93.3% over the year, and 636,979 people  left Armenia, with a y-o-y increase of 68%. Thus, the positive  balance amounted to 16,079 people, while a year earlier for the same  period, the migration balance was negative - 41,318 people.

According to the statistical data, during the reporting period, 3,770  foreign citizens received a residence permit in Armenia, of which  2,319 had a temporary status, and accordingly 1,451 had a permanent  status.  At the same time, the vast majority of those who received a  residence permit are citizens of the Russian Federation.- 1,059  people (257 - temporary status, 802 - permanent status).

During the reporting period, 588,731 tourists visited Armenia for  tourism purposes, which is 2.4-fold higher than a year ago.

According to the Central Bank of the Republic of Armenia, the inflow  of transfers from Russia to Armenia increased 3-fold in H1 2022, to  $1.13 billion, while the net inflow increased -fold, to $917.5  million. In Q2 2022 alone, the inflow of transfers from Russia  increased 3.7-fold, and net inflow - 7-fold. The share of Russia in  the inflow increased in H1 2022 to 60.5% from 39.6% in H1 2021,  exceeding even the pre-Covid level of 51.3% in H1  2019. It would be  appropriate to note that the surge in transfers from Russia to  Armenia was provoked by the massive arrival of Russians along with  the transfer of their capital.  Moreover, on a monthly term, a  significant increase in the net inflow of transfers from Russia began  to be observed already in February (a 3-fold increase), continuing to  grow at a rapid pace in the following months.

In early June, the World Bank improved its forecast for Armenia's GDP  growth for 2022 from the previous 1.2% to the updated 3.5%. Then, in  mid-June, the improved GDP growth for 2022 was announced by the  Central Bank of the Republic of Armenia - from 1.6% to an updated  4.9%. And at the end of June, the International Monetary Fund  presented its revised forecast for Armenia's GDP growth for 2022,  improving it from the previous 1.5% to an updated 5%. According to  official statistics, in 2021, Armenia's GDP reached a 5.7% growth  from a 7.2% decline in 2020,  slightly lower than the 7.6% growth in  2019 in the pre-Covid period. 

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