ArmInfo. In the first quarter of 2026, Armenia's economy continues to demonstrate strong activity, primarily due to significant growth in the construction and services sectors. This was stated by Central Bank Chairman Martin Galstyan during a meeting of the Parliamentary Standing Committee on Financial, Credit, and Budgetary Affairs on May 18.
He explained that in recent months, strong growth in the services sector has been accompanied by structural changes toward segments with expanding demand, and that there are also signs of increasing domestic demand amid rising tourism to Armenia due to tensions in the Middle East.
"The increase in prices for goods is primarily driven by supply, but demand remains." Given this development, many international organizations and financial market participants are forecasting Armenia's economic growth in the range of 5-5.5% for 2026. Annual inflation in the first four months of this year accelerated to 5.3%. This is due to both rising prices for imported food products and energy resources, as well as certain supply-side factors in the domestic economy. At the same time, inflation for goods and services with fixed prices, excluding medical services, remains close to the target threshold," Galstyan noted, emphasizing that inflation expectations and wage growth are demonstrating a stable trend.
Referring to the results of a survey conducted in May, he added that financial market participants estimate annual inflation in 2026 at above 4%, with a return to the target threshold in the medium term. "We cannot remain on the sidelines-the global inflation environment will also impact Armenia."
"It is important for the regulator to understand whether the current inflation of 5.3% and above is solely a consequence of supply-side factors, or whether additional action is required," the head of the Central Bank said.
It should be noted that, according to the Central Bank of Armenia's report "Monetary Policy for Q1 2026," published in March, the regulator expects GDP growth to be 7.1-4.7% in 2026 and 5.7-5.3% in 2027, also anticipating an improvement in foreign trade dynamics with a transition from recession to growth.
According to the Central Bank of Armenia's forecast, inflation is expected to range from 4.4-3.3% in 2026 (versus 3.3% in 2025), with a target of 3% (+/- 1 percentage point), and 3.5-3.1% in 2027. Moreover, according to this forecast, inflation in the non-exportable goods segment, characterized by rigid prices, will increase in 2026 to 3.3-3% (from 2.2% in 2025), and will continue to grow in 2027 to 4.1-3.3%. As a reminder, starting in 2025, the inflation target in Armenia is set at 3% with an acceptable range of +/- 1 percentage point, instead of the previous 4% (+/- 1.5 percentage points).
