Tuesday, June 11 2024 20:01
Karina Melikyan

WB does not change previous improved forecast for Armenia`s GDP  growth of 5.5% in 2024 and 4.9% in 2025 

WB does not change previous improved forecast for Armenia`s GDP  growth of 5.5% in 2024 and 4.9% in 2025 

ArmInfo. The World Bank has maintained its previously improved forecast for Armenia's GDP growth  at 5.5% in 2024 and 4.9% in 2025. This is noted in the World Bank's June Global Economic Prospects report.

According to the World Bank's forecast, in the Europe and Central  Asia (ECA) region, Armenia's GDP growth rate for 2024 is the second  after Tajikistan (6.5%), and for 2025 it is the third after Ukraine  (6.5%) and Georgia (5%).

For the ECA region as a whole, the World Bank expects a slight  slowdown in economic growth to 3% in 2024 and to 2.9% in 2025 (from  an actual 3.2% in 2023).

Notably, in its previous April "Europe and Central Asia Economic  Update, April 2024: Unleashing the Power of  the Private Sector"  report the World Bank noted that in the sectoral breakdown, the  drivers of Armenia's GDP growth in 2024, as before, will be the  services - 6.3% and the industrial sector - 5.3%, but compared to the  2023 rates, both the services and the industrial sector will stall in  rates, respectively, from 11.1% and 5.5% in 2023. As for the  agricultural sector, as before, the WB forecasted weak growth with a  slight acceleration to 0.9% in 2024 from 0.2% in 2023. In 2025, the  slowdown in growth in the services and the industrial sector will  continue - to 5.5% and 4.7%, respectively, and the agricultural  sector will accelerate in growth to 1.2% alone.

The World Bank justifies the projected slowdown in Armenia's economic  growth in 2024 to 5.5% (from 8.7% in 2023) by the slowdown in  investment growth and the maintenance of a negative trade balance. A  strong slowdown in growth is projected for exports and imports in  2024, to 5.2% and 6.7%, respectively (from almost the same 28.7% and  28.3% in 2023), with a slight acceleration in 2025 to 5.6% and 7%.   Armenia's budget deficit will worsen to 4.7% of GDP in 2024 (from  4.1% in 2023), but in the medium term there will be budget  consolidation, which will reduce this figure to 3.5-3.1% of GDP.   Armenia's current account deficit will worsen to 3.2% of GDP in 2024  (from 2.3% in 2023), but will remain manageable at 3.4-3.5% in the  medium term.  According to the World Bank forecast, Armenia's public  debt to GDP ratio will continue to grow - to 49% in 2024 (after  growing to 48.1% from 46.7% in 2023), but then in 2025-2026 there  will be a decline to 48.6-48.2%.  Thanks to stable economic  indicators and low inflation, according to the WB forecast, the  poverty rate in Armenia, calculated on the basis of purchasing power  parity of $6.85 per person per day (PPP 2017), will gradually  decrease to 47.7% in 2024 and further to 46.6% in 2025 (from 49.1% in  2023).

IMF forecasts a slowdown in GDP growth for Armenia in 2024 to 6%, and  the Asian Development Bank - to 5.7%. The forecasts of international  rating agencies for Armenia's GDP growth in 2024 look slightly more  optimistic, in particular, S&P Global Ratings expects a slowdown in  rates to 6.2%, and Fitch Ratings - to 6%. The Central Bank, with the  transition to a new monetary policy development system (FPAS MARK  II), began to calculate the GDP forecast for several scenarios in  2024 and indicate the expected growth not at one specific level, but  in a range. In particular, according to the new June forecast of the  Central Bank of the Republic of Armenia, GDP growth will be within  6.8-6.1% in 2024, and the growth drivers will be, to a greater  extent, the construction sector - 12.7% and the industrial sector -  8.3-7.5%, and to a lesser extent, the services - 6.5-5.8% and the  agricultural sector - 3.3-2.8%. Moreover, the Central Bank projects  an acceleration of growth in the industrial and agricultural sectors  (from 1.7% and 0.2% in 2023), while a slowdown will be observed in  the construction sector and the service sector (from 15.7% and 11.4%  in 2023). 

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