ADB forecasts 5.7% economic growth for Armenia in 2024

ArmInfo. The Asian Development Bank forecasts 5.7% economic growth for Armenia in 2024, with the  rate accelerating to 6% in 2025 Luke Fochtman, Deputy Country Director of ADB (Asian Development Bank )Armenia Resident Mission stated this during a press conference on April 11, presenting the ADO (Asian Development Outlook).

According to him, the forecast for 2024 is largely based on a  decrease in external demand, and next year, while next year the  growth rate will accelerate due to larger-scale government investment  programs in the development of infrastructure, housing construction,  etc.

Answering a question from an ArmInfo correspondent, Mr Fochtman noted  that the forecast for economic growth provides for growth in the  services sector by 9.3% in 2024 and accelerating to 9.4% in 2025,  which will be mainly due to the dynamics of tourist flows generated  by financial growth in prices in retail trade and IT services.

In addition, according to Bank analysts, the construction sector will  grow by 16.3%, accelerating to 18.1% in 2025. Mr determined such a  pace by the planned large-scale construction work, which is in tune  with the government's plans to increase capital expenditures and  investments in the construction of roads and social infrastructures.

Regarding the manufacturing segment, he noted that growth will  continue and will be driven by upward dynamics in the food, textile  and non-metallic industries.

At the same time, Mr Fochtman noted that growth will also be recorded  in the mining industry. Which in turn, according to him, will be  provoked by the increase in world prices of metals and the discovery  of new mines in Armenia.

In turn, Grigor Gyurjan Senior Economics Officer at  the ADB-Armenian  added that the forecast took into account exclusively economic  fundamental factors, including external demand, international  reserves, and international transfers.

During the press conference, speakers presented forecasts for several  other important indicators. In particular, according to ADO, average  y-o-y inflation in 2024, taking into account monetary policy and  measures taken by the Regulator in Armenia, will be 3%. In 2025 the  inflation rate will rise to 3.5%.  It is expected that the share of  the current account deficit in the GDP structure will be  2.4 % in  2024, and will increase to 2.7% in 2025. "We forecast that the growth  of exports and imports will slow down, which will be due to a further  reduction in transit trade volumes," Mr Fochtman said.

Answering a question from an ArmInfo correspondent about the  associated risks, Mr Gyurjan, Senior Economics Officer at the ADB  noted that there are no particular concerns regarding the projected  indicators. However, he drew attention to the fact that significant  growth will be recorded in terms of the budget deficit, at the same  time, noting that the draft budget envisages this indicator at the  level of 4.6%. "That is, it should be noted here that it will be at a  manageable level," Mr Gyurjan said. At the same time, the expert  added that if there are no currency shocks, the ratio of public debt  to GDP will also remain at a manageable level - within 55%.

The Asian Development Bank (ADB) has been in partnership with Armenia  since 2005 and remains one of the country's largest multilateral  development partners. As of April 2024, the Bank has implemented  numerous projects in Armenia worth $1.9 billion, which were aimed at  developing the transport, financial, energy, water sectors, and other  infrastructure.