Central Bank lowers Armenia's 2016 economic growth outlook

PanARMENIAN.Net - The Central Bank of Armenia has lowered its 2016 outlook for the national economic growth– from 2.8-3.4% to 1.3-1.8%, the regulator said in its inflation report based on its monetary policy for Q4 of 2016 and the third-quarter performance of the policy, ARKA reports.

The regulator says in its report that it revised its outlook downward because of the lower-than-expected economic growth indicators in the second quarter, little trade turnover and risks connected with the reduced agriculture and industry outputs.

It also says that the contraction of the inflow of money transfers into Armenia from Russia has significantly slowed down, and this will continue weakening domestic demand. But expansionary monetary and tax-budgetary policies and a low deflation environment will mitigate the situation.

In such conditions, domestic demand is expected to grow by 0.4%, which is still lower than its balanced definition, which means that amid the weak domestic demand, economic growth will be stimulated mostly by net export in 2016.

The central bank predicts 5.5-6.1% VAT growth for industry in 2016, and 2.2-2.6% more growth for services.

According to the regulator’s forecast, construction is believed to face 1.8-2.6% decline and agriculture 0.7-0.1% decline.

In the government budget for 2016, GDP growth is projected at 2.2%.