ArmInfo.Armenia and Kyrgyzstan should take in consideration that benefits of the migration influx will gradually decrease, which may be especially noticeable in the second half of this year. This opinion was expressed by EDB Chief Economist Evgeny Vinokurov in the Bank's analytical Macroeconomic Review for April 2023.
In the part of the analysis concerning Armenia, EDB analysts note that the country's economy maintains high growth rates, the main driver of which is the service sector. Inflation slowed down in March. At the same time, both in the services and industry sectors, there is a trend towards a gradual slowdown in economic activity, which indicates a gradual stabilization of demand in the country. In the first quarter of 2023, according to the Bank's analysts, economic growth in Armenia will be about 11% y/y. At the same time, exports continue to exceed imports in terms of value growth. Over the past seven months, export deliveries have almost doubled in y-o-y terms. Machinery and equipment, precious stones and metals, vehicles continue to play the main role in the dynamics of exports of goods. It is noted that, among other things, the maintenance of the growth rate of the export of goods, which is higher than the import, contributes to the stable appreciation of the Armenian dram. Inflation in Armenia in March slowed down to 5.4% y/y after 8.1% y/y a month earlier. This dynamics was mainly driven by a slowdown in price growth in the food segment, including due to a decrease in food prices. The sharp slowdown is mainly due to high inflation in the same period last year, when consumer prices rose noticeably. In March, for the first time in more than a year, the growth of service prices decreased, indicating the stabilization of consumer demand. The main factors limiting the rise in prices are the appreciation of the Armenian dram and the weakening of external price pressure on imported goods.
Analysts remind that already in February, compared to the same period of the previous year, the Armenian dram appreciated against the basket of currencies of trading partner countries. The dram appreciated against the dollar by 21.8% y/y, against the euro - by 24% y/y. At the same time, the national currency continued to appreciate gradually throughout the period starting from the beginning of 2023. At the end of February, the level of international foreign exchange reserves amounted to $3.5 billion. Maintaining a high level of remittances and exceeding the rate of growth of exports compared to imports will contribute to the appreciation of the dram. The public debt of the Republic of Armenia at the end of February 2023 decreased to 54% of GDP ($10.6 billion) from 72% of GDP at the end of February 2022. This was facilitated by the rapid growth of GDP, the appreciation of the dram and the decrease in the nominal level of external debt.
