Armenian authorities` GDP forecasts for 2024 seem overstated - expert 

ArmInfo. Haykaz Fanyan, Director of the Armenian Center for Socio-Economic Studies (ACSES),  said in response to ArmInfo at a press conference organized by the Economic Journalists Club. 

According to Statistics Committee data published yesterday, Armenia's  GDP growth slowed down in 2023 to 8.7% (from 12.6% in 2022),  amounting to AMD 9,503bln ($24.2bln) at current prices. The GDP  deflator index also decreased - to 102.8% from 108% in 2022.

According to the economist, 2023 presented a pleasant surprise to the  Armenian economy. The actual figure turned out to be higher than the  expectations of both international organizations and the country's  financial authorities. Fanyan recalled that the current Cabinet of  Ministers in its 5-year program of activities has set a goal of  ensuring GDP growth of 7% annually, and in the presence of favorable  external conditions - all 9%. Thus, the recorded growth of 8.7%  turned out to be closer to the "ceiling" of 9% growth planned by the  Cabinet for 2021-2026.

According to the head of ACSES, economic growth of 8.7% in 2023 was  driven mainly by trade (2.9 percentage points), information and  communications (1.7 percentage points) and construction (1.7  percentage points). 1 p.p.). The contribution of the trade sector to  recorded GDP, according to the economist, was mainly due to re-export  transactions. Especially in the first 8 months of 2023, car  re-exports reached impressive volumes. However, tightening on the  part of international structures, Russia and Georgia, by the end of  the year led to a significant decline in car re-exports. Meanwhile,  for other items, the pace of re-export remains unchanged. Moreover, a  reverse trend has emerged - certain goods are imported from the  Russian Federation to the Republic of Armenia, sometimes undergo  processing, and then are exported to other countries. The latter  circumstance also has a positive impact on the Armenian economy,  Fanyan noted.

The expert refrains from making specific assessments of the  contribution of relocants to GDP in 2023."However, with the naked eye  one can observe a reduction in their numbers over the past year. The  downward trend will continue. At the same time, we see the growing  role of labor migrants from India, who over time will become a  decisive factor for the growth of the areas in which they are  involved," the expert noted.

In general, those external positive impulses that were present in  2022 also remained in 2023. As a result, the real cumulative growth  of the Armenian economy over the 3 post-Covid years amounted to  29.5%, and the average annual growth was more than 9.8%. (5.8% in  2021, 12.6% - in 2022 and 8.7% in 2023). Thus, the potential for  generating GDP has increased - the Armenian economy has managed to  develop its capacity in a certain way, which will ensure growth in  subsequent years.

"GDP growth of 8.7% for a country like ours is considerable,  considering that neighboring Georgia, with almost comparable  conditions - relocated employees from Russia, re-exports, etc., -  according to the latest data, recorded 7.5% economic growth," he  noted. 

At the same time, the economist sees certain risks for 2024 in terms  of maintaining the rates recorded over the past two years. In this  regard, he considers the financial authorities' forecasts, in  particular those included in the state budget, for GDP growth in 2024  at 7%, to be overestimated. The World Bank's estimates (4.7%) look  more realistic, he noted.

"There will be no decline, there will be some growth, especially if  the promised investment projects are implemented, for example, the  investment program to launch the Amulsar mine. However, in the coming  years, economic growth in Armenia will continue, it will be ensured  by the presence of aggregate demand," Mr Fanyan said.