IMF expects "around 1%" GDP growth for Armenia in 2021

PanARMENIAN.Net - The International Monetary Fund (IMP) expects GDP growth of around 1% in 2021 and 3.5% in 2022 in Armenia.

An IMF team held virtual staff-level discussions with the Armenian authorities during April 6–21 to discuss recent economic developments, the outlook, and the policy priorities ahead.

The Armenian economy has been severely affected by the Covid-19 pandemic and military hostilities unleashed by Azerbaijan in fall 2020. GDP dropped by 7.6% in 2020 reflecting the decline in services and trade. Annual inflation accelerated to 5.8% in March 2021 amid recent global food inflation and dram depreciation.

“The recovery is likely to be protracted. While there is uncertainty about the pace of the recovery, our conservative outlook expects growth of around 1 percent in 2021 and 3½ percent in 2022. Inflation is projected to peak in the first half of 2021 before declining to around 4 percent by year-end as the temporary impact of imported food inflation and the pass-through from recent depreciation dissipate," IMF said.

“The immediate policy priories are to protect vulnerable households (including displaced Nagorno-Karabakh residents), accelerate planned capital expenditure, and fast-track large-scale vaccinations to support economic recovery. These items should be prioritized within the existing 2021 spending envelope."

The Central Bank of Armenia earlier revised its economic growth forecast for the country in 2021. Its governor Martin Galstyan said in mid-March Armenia’s Gross Domestic Product (GDP) will expand by 1.4% instead of 2% that was forecast before the start of the year.