Fitch 2023 Forecast: Armenia`s public debt to fall to 47.3% of GDP  while economic growth slows to 6.1%

ArmInfo. According to the Fitch Ratings forecast for 2023, Armenia's public debt will decrease to 47.3% of GDP, and external debt - to 38.1% of GDP, while economic growth slows down to 6.1%. The agency also expects that in 2023 inflation in Armenia will be 6.5%, GDP per capita - $7472, the state budget deficit - 2.5% of GDP, and the current account deficit (including FDI) will remain at 1.2 % of GDP. This is noted in the February Fitch rating report on the capital of Armenia - Yerevan.

According to ArmInfo analysts, it looks strange that Fitch Ratings,  while indicating the forecasts of the abovementioned indicators for  2023, compares them with the actual data for 2021. Looking at the  compared figures, one gets the impression that the rating agency  acted in such a way that the dynamics showed an improvement, rather  than deterioration, which would be the case if the comparison was  made with the data of 2022. 

Fitch Ratings explains its similar approach by the previous revision  of the rating of Yerevan in 2021. But in the end, when forecasting  for 2023, it would be more logical to work with the data of 2022 to  compare and present a truthful overview, which, by the way, were  officially published long before the current rating of Yerevan. In  other words, Fitch Ratings analysts used what was at hand, being  simply too lazy to take 2022 data for comparison. As a result,  comparing 2021 with forecasts for 2023 shows a very different results  than it would be if compared with 2022.

For complete clarity, we will explain specifically on the indicated  indicators. Thus, the projected GDP growth of 6.1% in 2023 compared  to 5.7% in 2021 looks like an acceleration, while in fact, a  comparison with 12.6% in 2022 indicates a slowdown. Projected 2023  GDP per capita of $7,472 looks higher compared to $4,669 in 2021 than  compared to $6,569 in 2022. Inflation expectations of 6.5% in 2023  compared to 7.2% in 2021 point to a weaker decline, while comparison  to 8.3% in 2022 shows a more visible downward trend. The decrease in  the share of public debt in GDP from 60.3% in 2021 to 47.3% projected  for 2023 looks more noticeable than the comparison with 49.3% in  2022. And for the share of external debt in GDP, a comparison of the  projected 38.1% with 56.2% in 2021 indicates a decrease, while a  comparison with 29.9% in 2022 indicates an increase. The same outcome  emerges for the share of the state budget deficit in GDP - a  projected 2.5% compared to 4.6% in 2021 indicates a decrease, while a  comparison with 2.1% in 2022, on the contrary, indicates an increase.

For comparison, let's note that S&P forecasted the growth of  Armenia's GDP by an average of 4.3% per year for the next few years.  Regarding the projected prospects for a slowdown in GDP growth, the  rates indicated by S&P (4.3%) do not differ much from the  expectations of the Central Bank of the Republic of Armenia, the IMF  and the World Bank for 2023- 4.6%, 4.5% and 4.1% respectively.