Armenia’s economic growth to slow down in 2020 amid the worsened external environment
Moscow, 30 March 2020. The Eurasian Development Bank (EDB) projects Armenia’s GDP growth to slow to 5.6% in 2020, as the low base effect will peter out in the ore mining sector and net exports will decline because of the weak external demand. This finding is presented in The Macroeconomic Review for Armenia published by the Directorate for Research at the EDB.
In 2019, Armenia’s economic growth speeded up to 7.6% from 5.2% the year before, driven by higher household consumption and the restoration of mining outputs.
This year, economic activity will benefit from positive dynamics in the manufacturing and construction sectors, as well as the recovery of agriculture. EDB analysts believe that the fiscal and monetary policy will stimulate domestic demand and will also support economic development. In the medium term, they expect GDP to grow around the potential level estimated at 5%. Economic activity will be determined by labour productivity and investment demand. In the long run, improvements in the country’s business and investment environment and the implementation of structural governmental reforms will help to strengthen the economy.
Last year's inflation slowed to 0.7% as the Armenian dram appreciated against the currencies of the country’s main trading partners, as well as against the backdrop of the weak external inflationary environment, and the structure of consumption and pricing in commodity markets. The EDB forecasts inflation to remain low in 2020 because of the weak price environment and slow economic growth in the countries that are Armenia’s key trading partners.
The review suggests that the prevailing short-term risks for the country include the possible weakening of business activity due to lower demand and supply as a result of the coronavirus pandemic. A decline in cross-border freight transportation can cause disruptions in the supply of intermediate goods. Measures to prevent the spread of the virus may affect business activity as well. EDB experts believe that the most vulnerable sectors are industry, trade, as well as service sectors such as culture, entertainment, recreation, accommodation, and catering.
Additional Information:
The Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. The EDB's charter capital totals US $7 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.
The EDB Media Centre:
Alexander Savelyev +7 (985) 765 23 59 (Moscow)
Azima Sapargaliyeva +7 (777) 750 00 08 (Almaty)
Sergey Gorbachev +7 (916) 727 22 00 (Moscow)