ArmInfo.The Luys Foundation has analyzed the socio-economic development of the RA economy in January-May 2025. According to the analysis, during the reporting period, the growth rate of economic activity in the RA accelerated mainly due to the base effect.
The economic activity saw an increase in May, reaching 10.4%, with a rate of acceleration comparable to the slowdown in growth rate from the previous year. However, despite the positive impact of the base effect. there are fast-growing sectors in the economy, particularly in services and construction, which are accelerating their growth rates.
The experts believe that the dynamics of industry and foreign trade remain alarming. Both sectors have experienced large declines, with a slow rate of mitigation. The latter indicates a lack of factors ensuring economic growth.
The significant decline in exports is mainly due to the neutralization of gold re-export volumes, which should not be a major concern. However, adjusting export growth to exclude the contribution of the commodity group (which neutralizes a significant part of the re-export effect), the growth is only 0.7%. That is, export growth without taking into account the base effect is so low that it indicates a loss of export potential in recent years. Additionally, the Luys Foundation noted that inflation is accelerating at a fairly high rate. In May, 12- month inflation increased by 1.1 percentage points, reaching 4.3%, which is significantly higher than the central bank's new target of 3+1%. Moreover, the Central Bank's target indicator is specific, indicating that the Central Bank will aim to bring inflation to 3%, rather than keeping it in the 2-4% range. Under these conditions, if inflation continues to accelerate, the Central Bank will be forced to tighten monetary policy by raising interest rates, which will further complicate the economic situation. Meanwhile, the rate of lending growth has also accelerated. Mortgage and consumer loans to the population increased by 42.7% and 37.9%, respectively, in May. This is an extremely high figure, given the low growth of economic activity, wages and foreign remittances. These events create risks in the financial system that raise concerns, as stated by the Luys Foundation.
