The EDB expects Armenia’s GDP to decline by 3.5% in 2020 and grow at 7-9% in 2021–2022
Moscow, 30 September 2020. The Eurasian Development Bank (EDB) projects Armenia’s GDP to decline by 3.5% in 2020 and then recover in 2021–2022. This finding is presented in the Macroreview for Armenia published by the EDB Directorate for Research.
The review notes that the Armenian economy contracted by 5.7% year-on-year in the first half of 2020. The main factor that pushed the country’s real GDP down was the negative impact of the COVID-19 pandemic. The country faced a decrease in consumer and investment demand due to sanitary restrictions, a drop in incomes, including foreign remittances, and employment, as well as growing uncertainty.
The EBD’s base case projections suggest that, in 2021–2022, the economy will recover at a rate of 7-9% a year driven by increases in foreign remittances and export prices (in particular, those of ores and metals) as the global economic situation stabilises, as well as stimulated by fiscal and monetary policies.
The review also notes that inflation remained below the Central Bank of Armenia’s (CBA) target of 4 ± 1.5% and was 1.7% and 1.8% year-on-year in June and August, respectively. Its acceleration from 0.7% year-on-year at the end of the last year was primarily driven by seasonally volatile and regulated prices. The EDB projects that, in 2022, the consumer basket value will stably pick up its growth rates within CBA-envisioned limits as aggregate demand will rebound. The review suggests that the CBA will start to increase the interest rate in late 2021 amid the gradual acceleration of inflation.
The risk that the economic situation will deteriorate because of new coronavirus outbreaks in and beyond the country persists. Geopolitical risks, including those associated with the Western sanctions against Armenia’s economic partners (Russia), may also affect the economy.
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.
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