ArmInfo. The Central Bank of Armenia has improved its GDP growth forecast for 2025 from the previous 5.1-4.6% to an updated 5.8-5.7% (depending on the inflation trajectory), against the actual 5.9% growth in 2024. The Central Bank has also revised its GDP growth forecast for 2026, now expecting an acceleration in growth rates to 5.7-6.2%, instead of the previously announced slowdown to 4.9-4.4%.
As a result, the absolute value of GDP will increase in 2025 to 11.2-11.1 trillion drams (from 10.193 trillion drams in 2024), and in 2026 it may reach 12.3-12.2 trillion drams, as noted in the report from the Central Bank of the Republic of Armenia "Monetary Policy for the III quarter of 2025" published on September 16.
With the transition to a new improved system for developing monetary policy (FPAS MARK II), the Central Bank began to calculate the GDP forecast according to the Case A and Case B scenarios from 2024. Thus, the Case A scenarios assume monetary policy rates that exceed market expectations, given that risk and uncertainty factors can create a more inflationary environment in the economy. Case B scenarios assume lower monetary policy rates than market expectations, given that risk and uncertainty factors can create a deflationary or low inflation environment in the economy. Moreover, Case A scenarios provide for an expansion of demand and a curb on supply, while Case B scenarios, on the contrary, provide for a curb on demand and an expansion of supply. It is worth noting that inflation under these scenarios has been significantly revised in the new forecast for 2025 - from the previous 3.4-3.2% to an updated 4.1% (according to Case A) and 3.7% (according to Case B), against an inflation rate of 1.5% in 2024. And already in 2026, there will be an approach to the updated target level (3%, +/- 1 p.p.) - up to 3.7% (according to Case A) or up to 3.2% (according to Case B). Inflation in the segment of non-exportable goods with rigid prices, according to the new forecast, will decrease in 2025 to 2.2% (from 2.5% in 2024), after which it will increase to 3.5-2.8% in 2026. The dynamics of exports and imports, according to the updated forecast of the Central Bank, after almost identical growth in 2025 by 35.6-31.4% will worsen in 2025 to a decline of 30.4-36.8% (for exports) and 32.1-32.7% (for imports), against the previously predicted decline in exports by 32.3-36.4% and imports by 29-34.2%. In 2026, the Central Bank expects a more restrained improvement in the dynamics of both exports towards 2.7-4.4% growth, and imports towards 3.1-3.4% growth (against the previous 5.4-5% and 4.7-3.1%, respectively).
According to the new forecast of the Central Bank, in 2025, the ratio of the current account deficit to GDP will be formed at the level of 4.5% (according to Case A) or 4.2% (according to Case B), after entering into negative 1.9% in 2024 (from positive 0.8% in 2023). In 2026, this indicator will linger at negative 4.5% (according to Case A) or 4.3% (according to Case B).
The ratio of remittances to GDP, according to the updated forecast of the Central Bank, will decrease in 2025 to 3.1-3.2% (after decreasing in 2024 from 7.9% to 4%), and then in 2026 will slightly advance to 3.3%, thereby recording a weakening of the economic effect in terms of the impact of transfers on the economy. The Central Bank's forecast for 2025 on budget revenues and expenditures has not changed: expenditures will grow more noticeably - from 2.6 trillion to 3.4 trillion drams, than revenues - from 2.4 trillion to 2.8 trillion drams, resulting in the state budget deficit increasing from 191.6 billion to 603.7 billion drams. As a result, in 2025, the ratio of the state budget deficit to GDP will increase from 2% to 5.4%, with a slight increase in the share of revenues in GDP from 24.8% to 25% and a more noticeable increase in the share of expenditures in GDP from 26.8% to 30.3%.
This report from the Central Bank of the Republic of Armenia also provides forecasts for economic development and inflation in the United States, the Eurozone and the Russian Federation, for oil and copper prices, and for the FAO index. Thus, the US economy is expected to slow down in 2025 to 1.6% (from 2.8% in 2024) and inflation to weaken from 3% to 2.8%. The Eurozone economy will slightly accelerate in growth in 2025 to 1.2% (from 0.9% in 2024), with inflation weakening from 2.4% to 2%. In 2025, the Russian economy will stall in growth to 1.1% (from 4.3% in 2024), with inflation accelerating to 8.7% (from 8.4% in 2024). In 2026, the US economic growth will slow to 1.5%, the Eurozone will also slow to 1.1%, and Russia will accelerate to 1.5%, with inflation in the US remaining at 2.8%. In the Eurozone and Russia it will decrease to 1.9% and 6.3%, respectively. The price of oil, according to the new forecast, will fall from $80.5 in 2024 to $68.9 per barrel in 2025 and further to $62.3 in 2026. The price of copper, unlike the previous forecast, will increase more noticeably - from $9142.1 per ton in 2024 to $9491.2 per ton in 2025 and further to $9747.6 in 2026. The FAO index, after declining in 2023-2024 from 124.1 to 122, will begin to grow in 2025 - reaching 129, and then in 2026 will continue to grow to 134.1. Then, in 2027-2028, copper will continue to rise in price, the FAO index will also accelerate in growth, and the price of oil will decrease even more.
