Armenian Central Bank forecasts more modest GDP growth for 2021

PanARMENIAN.Net - The Central Bank of Armenia has revised its economic growth forecast for the country in 2021. Its governor Martin Galstyan says Armenia’s Gross Domestic Product (GDP) will expand by 1.4% instead of 2% that was forecast before the start of the year, the Armenian service of RFE/RL reports.

“It is mainly due to the slowdown recorded in certain sectors of the economy during the fourth quarter [of 2020] and in the first quarter of this year, in particular, in industry, services, agriculture,” Galstyan told a news conference on Tuesday, March 16.

The Armenian economy contracted by 8.5% in 2020 against the background of the 44-day war unleashed by Azerbaijan against Nagorno-Karabakh and the Covid-19 pandemic.

Galstyan said inflation, including increase in prices for basic foodstuffs, is mainly influenced by the international market situation as well as the devaluation of Armenia’s national currency, the dram, which has lost nearly 10 percent of its value since last year’s war.

“Under the influence of positive expectations for the recovery of global demand, as well as due to a number of supply factors, international food markets have shown some price increase tendencies, which also contributes to the formation of a higher-than-expected inflationary environment in partner countries. In such a situation, the Board of the Central Bank still expects some inflationary impact from the external sector on the Armenian economy,” the Central Bank’s governor said.

Armenia’s Central Bank left the current refinancing rate unchanged. It was raised by 1 percentage point in December and then again by 0.25 percentage point in February to stands at 5.5 percent.